Greentech Lead America: The shift towards solar power was initiated primarily by countries of the European Union, like Germany, Italy and Spain.
The main drivers for rapid growth in these markets were the feed-in-tariffs (FiTs) offered by the governments and compulsory quotas such as RPOs which ensured implementation of solar as a source of power.
USA and Japan were also amongst the forerunners in the global solar market. Several countries around the world, including India, have followed and implemented this model, according to Bridge to India’s India Solar Handbook.
Solar PV generates 3.2 percent of the power in Germany with an installed capacity of 24,878MW at the end of 2011. It plans to install 66GW of solar by 2020 as per its Renewable Energy Sources Act which was implemented in January 2012. If Germany maintains its current growth rate of installations, at 3,500MW annually it shall remain the largest market for solar power. However, the government has lowered the FiTs in January 2012 to €0.14/kWh. It is expected that the country will have at least over 39GW of installed solar PV capacity by 2016.
The highest capacity addition in 2011 for solar power was in Italy, with 9,284MW added in the year. Overall the country’s installed capacity stands at 12,754MW by the end of 2011. The 4th Conto Energia is targeting a capacity addition of 23GW by 2016. However, the government is of the opinion that the cost of FiTs should not exceed€6 billion to €7 billion annually. By the end of 2011, the cost for FiTs stood at €5.5 billion, which led to the government considering putting a cap on the installations per year. It is expected that the country will have at least over 23GW of installed solar PV capacity by 2016.
Japan had the highest installed capacity for solar power after Germany and Italy with 4,914MW, at the end of 2011. It introduced a renewable energy policy in 2003 with a target to install 16TWh of renewable power by 2016 with no specific target for solar. The country’s renewable industry is expected to get a further push with the Ministry of Economy, Trade and Industry having introduced a new FiT in June 2012, in effect since July 2012. The new solar FiT is amongst the highest offered anywhere at€0.42/kWh. The new FiT regime aims at driving the solar industry from residential rooftop installations to larger ground mounted installations. It is expected that the country will have at least over 18.6GW of installed solar PV capacity by 20163.
The USA had an installed capacity of 4,383MW by the end of 2011. By Q2 2012 the country had an additional 1,253.7MW of installed capacity. The boom in the market is primarily in the state utility sector, with 447.3MW added in just Q2 2012.
The residential sector too, saw a rise in installations from 2011 as the model for third party ownership gained popularity. This model has not led to any real expansion in the market but a shift towards it from the direct ownership sector. Of 51 states in the country, 30 states have Renewable Purchase Standards (RPSs are an equivalent of RPOs), of which 17 states have a solar carve out. There is no national level RPS. Growth in solar is primarily concentrated in California, Arizona and New Jersey. It is expected that the country will have at least over 30.5GW of installed solar PV capacity by 2016, said Bridge to India’s India Solar Handbook.
Spain had an installed capacity of 4,400MW by the end of 2011. The government initially offered very high FiTs to support the solar industry. However, as a result of the 2008 economic slowdown, the country in 2012 removed its FiTs. In addition, the pace of installations was slow due to complicated and lengthy regulatory procedures involved in registering and implementing a project. This could result in a sharp fall in installation in the country, which have already seen a drop in 2011 as compared to 2010. It is expected that the country will have at least over 5.6GW of installed solar PV capacity by 2016.
China had an installed capacity of 3,093MW by the end of 2011. It supports solar power projects through an FiT of €0.12/kWh. The country is also the world’s largest PV module manufacturer with the lowest prices for its cells and modules. Additionally, it has the largest solar power plant in the world with an installed capacity of 200MW. It is expected that the country will have at least over 35GW of installed solar PV capacity by 20164.
Australia had an installed capacity of 1,298MW by 2011. It is supported by FiTs at a state level, and is currently aiming for a national level FiT to reduce the volatility in the market. The installations in the country are mostly rooftop installations, with over 500,000 solar PV systems on the rooftops of homes and schools. This is the only country where the REC mechanism, which applies to grid connected rooftops, has been successfully implemented. Currently, though, even that sector is seeing a slowdown as the supply exceeds the demand. It is expected that the country will have at least over 4.9GW of installed solar PV capacity by 2016.
India, at the end of 2011 had an installed capacity of 462MW. It has since then added 588MW till October 2012. The primary driver for the market has so far been the FiTs offered under various central and state solar policies. The project allocations under various policies and those carried out directly by several states are carried out using the reverse bidding mechanism.
The industry for RECs is also expected to pick up pace with the introduction of new state level initiatives. Even though it is currently depending on government incentives and subsidies for the initial thrust, the country’s long term strategic aim is for the solar industry to be led by market mechanisms. It is expected that the country will have at least over 12.8GW of installed solar PV capacity by 20166.