Asian markets to offer better returns on solar business


Asian markets to offer better returns on solar business

Portugal’s solar market remains one of the hottest for
investors able to build systems under that country’s installations cap,
according to Lux Research.

The country’s internal rates of returns (IRR) for the six
major solar technologies remain high in 2011 along with Cyprus and Greece,
though the financial crisis in Europe could significantly hinder that market.

“Uncertainty surrounding Europe’s financial situation and
its countries’ ability to pay out incentives will prevent wild growth,” said

Matt Feinstein, the Lux Research Analyst who led the Demand Forecast.

However, a number of Asian markets have high returns
going into 2012. Malaysia will be able to return at 24.1 percent, the
Philippines at 22.6 percent, and Japan at 20.9 percent. They will push demand
toward that region in 2012 and 2013.

IRR is the discount rate at which the net present value
(NPV) of future cash flows from a capital investment equals zero. Capital
expenditure is the primary factor in determining a market’s IRR, along with
incentives and operating expenses. It provides an apples-to-apples metric for
investors to compare demand and project growth for solar across disparate

Top 5 Locations by IRR (1Q12)

1. Portugal

2. Cyprus

3. Hawaii

4. Greece

5. Israel

Recently, a Lux Research report said
that the capacity for alternative fuels such as ethanol, biodiesel, and
renewable diesel is at 44.6 billion gallons a year in 2011, but systemic
hurdles will constrain their growth to under 5 percent annually through 2015.

But pockets of promising growth still exist as variations
in local policy, demand, and feedstock availability mean that new nations will
arise as global hotspots in the constrained industry, according to a report by
Lux Research.

By Team