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Global Solar Market
Poised For Rebound

The solar photovoltaic market is set to rise from the ashes of its 2011 crisis to grow to $155 billion in 2018, as market forces engineer a turnaround to a healthy 10.5% compound annual growth rate (CAGR), according to a new report from Lux Research.

In the most likely scenario, the report says the PV market will grow at a modest clip to 35 GW this year before ramping up to 61.7 GW in 2018.

“Manufacturers’ nightmare is turning into a long-term boon for the industry. Record-low prices pushed gross margins to near zero or below, but they’ve made solar installations competitive in more markets,” says Ed Cahill, Lux Research associate and the lead author of the report.

“Supply and demand will come back into balance in 2015, easing price pressure, returning manufacturers to profitability and restoring the industry to equilibrium,” he adds.

Lux Research says analysts used a detailed levelized cost of energy analysis in 156 separate geographies, accounting for 82% of the world’s population, to determine the viability and competitiveness of solar in each market.

According to the report, the U.S., China, Japan and India will take over where Germany and Italy left off. With an 18% CAGR to 10.8 GW of installations in 2018, the U.S. will emerge as the world’s second-largest market. But China will leapfrog it, growing over 15% annually to 12.4 GW in 2018.

Utility-scale solar, the smallest segment in 2012 at 8.6 GW, will grow the fastest to 19.9 GW in 2018 as developing markets turn to PV. Globally, the report says commercial applications reign supreme as markets like the U.S. and Japan move to large rooftop installations.

Struggling start-ups present opportunities to acquire intellectual property at low prices. For example, the report says Hanergy acquired Miasolé - which in 2012 announced the leading CIGS module efficiency at 15.5% - for only $30 million after investors had pumped $500 million into the firm.

 

A Prod Rather
Than A Slap?

The European Commission (EC) has decided to phase in a regime of anti-dumping duties on solar panels, wafers and cells imported into the European Union (EU) from China rather than let go with both barrels.

The tariffs will start at 11.8%. The provisional rate is scheduled to remain in effect until Aug. 6, at which point it will shoot to 47.6%. Many expected the higher tariffs to take effect at the outset.

According to the EC, the phased approach is intended to counteract the harm caused by what it says are cut-price solar products dumped on the European market while avoiding wholesale disruption of that market, acknowledging large demand for Chinese imports. EU Trade Commissioner Karel De Gucht said the stepped implementation of tariffs also serves to motivate China to come to terms sooner rather than later.

“This staggered response allows a smooth transition for our markets to adapt - and it is a one-time offer to the Chinese side, providing a very clear incentive to negotiate,” said De Gucht, in a statement. “It provides a clear window of opportunity for negotiations, but the ball is now in China’s court. It is clear that if China does not provide a solution by August, then the higher tariffs will apply.”

The EC signaled its march toward a solar trade war in September of last year when it announced it would officially investigate a complaint filed by SolarWorld and other companies alleging dumping in the European market by Chinese firms. In early May, reports surfaced that the EC had resolved to impose tariffs. After talks between the EC and Chinese trade representatives ended inconclusively on May 27, tariffs seemed all but inevitable.

Throughout the affair, Chinese solar industry representatives and executives have denied engaging in unfair trade practices, calling dumping charges misleading and unfounded.

If the inevitability of tariffs is now a fact, the first step is a relatively modest one. Craig Winneker, head of political communications for the Brussels-based European Photovoltaic Industry Association (EPIA), says the phased approach provides ample room for maneuver before the duties become truly painful, with many voices to be heard.

“It is important to remember that a final decision regarding this anti-dumping investigation will only be made by December this year, and that definitive duties, if any, will be decided by the council representing the 27 European member states,” said Winneker, in a statement.

Professing EPIA’s neutral stance on the issue, Winneker nevertheless said the rapid decrease in prices of PV products from China “has resulted in [reduced] margins over almost the entire value chain of the solar PV industry and put many of its players in severe financial difficulties.”

In the short term, the EC observes that the tariff policy may cost some jobs among European installers of PV systems. However, it says many more jobs - 25,000 employed in EU solar production alone - are at stake.

“It’s clear that the dumping of these Chinese solar panels is clearly harming the European solar panel industry,” De Gucht said, adding that the EC’s estimate of the fair sale price of Chinese solar panels would actually be 88% higher than the current price for which they are sold on the European market. “The dumping threatens the sector’s very survival.”

The Alliance for Affordable Solar Energy (AFASE), a trade association opposed to the tariffs, was quick to respond negatively to the EC decision.

“AFASE regrets the commission’s decision to ignore the considered positions of 18 out of 27 member states voting against duties,” the organization remarked. “Even though the commission has set the preliminary duties lower than expected for the initial two months, AFASE stresses that any level of tariffs will seriously damage the European solar industry.”

For its part, the Solar Energy Industries Association (SEIA) expressed optimism that the mild nature of the initial tariff regime would serve to focus the attention of both parties on achieving a solution before lasting damage occurs.

“We view [the] decision by the European Commission to adopt a thoughtful two-stage approach to the imposition of duties on solar panels from China as a positive development,” said John Smirnow, SEIA vice president of trade and competitiveness, in a statement. “The EC’s measured response creates a positive environment for negotiations, which we think is critically important given the global nature of the solar supply chain.” - Michael Puttré

 

L.A. Finalizes
FIT Program

Los Angeles has made a number of strides toward what many hope is a bright energy future with a big new PV array and the finalization of its 150 MW feed-in tariff (FIT) program.

The Los Angeles Department of Water and Power (LADWP) has begun receiving electricity from a new 8.5 MW solar array co-located with the utility’s Pine Tree Wind Farm. The LADWP expects the array, located in the Tehachapi Mountains and consisting of 35,160 ground-mounted solar modules, to produce an average of 18 GWh per year over 25 years. The project represents the LADWP’s second utility-built solar array.

According to the utility, the Mojave Desert-Tehachapi Mountains area has become a renewables hub. Late last year, the LADWP purchased the 250 MW Beacon Solar Project in the region from Nextera Energy Resources LLC and will use its FIT program to build a 50 MW solar project there and expects to issue a request for proposals (RFP) for private developers to build 200 MW of solar on the 2,500-acre property.

Unlike the set-pricing FIT program approved for the first 100 MW of local rooftop solar, the LADWP says the FIT50 will be competitively priced through RFPs that are “bundled” with the planned 200 MW solar project. The RFP sets a price cap for each solar project - $140/MWh for the local FIT solar and $85/MWh for the Beacon project.

 

Regulators OK
PSE&G Solar Plan

In late May, the New Jersey Board of Public Utilities (BPU) officially signed off on Public Service Electric and Gas Co.’s (PSE&G) proposal to invest up to $446 million in new solar installations throughout the state.

The utility initially sought approval for about $880 million, but the two parties eventually agreed on more than half of that in April. PSE&G will use the new funds to extend two of its solar financing initiatives: the Solar Loan and Solar 4 All programs.

PSE&G plans to lend customers about $200 million over three years to support 97.5 MW of new solar installations under the Solar Loan III program. In addition, the utility will spend $247 million over five years to build 42 MW of solar on brownfields and landfills, as well as 3 MW in pilot projects, under its Solar 4 All program.

According to the BPU, the current Solar 4 All program is in line with Gov. Chris Christie’s Energy Master Plan and has already helped build a large amount of New Jersey’s 33 MW of solar on underutilized land.

“The Christie administration’s enduring commitment to the advancement of clean, renewable energy technologies, as noted in Governor Christie’s Energy Master Plan, allows us to promote clean, safe and reliable in-state generation while promoting job growth and a cleaner environment,” Bob Hanna, BPU president, said in a statement.

To help pay for the Solar 4 All extension, the average PSE&G customer will experience a $0.28 rise in his or her annual bill in the next year, with a maximum increase to $4.44 between Oct. 1, 2015, and Sept. 30, 2016. The BPU says rate impacts will lower in the years after.

Both local and national solar stakeholders have praised the approval.

Jamie Hahn, co-founder and managing director of New Jersey-based commercial solar integrator Solis Partners, tells Solar Industry that PSE&G’s expanded loan program will help a state troubled by a volatile solar renewable energy credit (SREC) market.

“Without a mechanism to de-risk the investment and securitize the SREC revenue stream, there has been very little direct investment in the commercial marketplace outside of larger projects financed through third-party-owned [power purchase agreements],” Hahn explains. “With the recent approval of the PSE&G Solar Loan III program, it should help facilitate financing, as it enables investors to lock in a 10-year SREC contract price and collateralize the loan.”

Hahn says the utility initiative, as well as similar finance programs, will undoubtedly spur new solar project development in New Jersey over the next few years.

SEIA agrees. Katie Bolcar Rever, the organization’s director for Mid-Atlantic states, said in a statement that the long-term financing will, indeed, aid the ailing SREC market.

“By allowing PSE&G to invest directly in solar projects on brownfields and landfills, the BPU is placing a high priority on solar development on these lands,” she said. “However, we should keep in mind that utility-direct investment is just one way in which regulators and policymakers can direct solar development in New Jersey. ”

Bolcar Rever noted that SEIA has “a great deal of confidence in the future of the New Jersey solar industry” and the BPU decision “simply adds to that confidence.”

- Joseph Bebon

 

Japanese Market
Is Boiling

Japan’s solar installations in gigawatts surged by 270% in the first quarter of this year (Q1’13), positioning the country to surpass Germany to become the world’s largest photovoltaics market in terms of revenue this year, according to a new report by IHS Inc.

Although Japan is forecast to install fewer gigawatts this year than China, which is forecast to install the most solar capacity, the high prices of PV systems in Japan will drive it to become the world’s largest market in revenue terms. Japan is forecast to install $20 billion worth of PV systems this year, up 82% from $11 billion in 2012. In contrast, the global market is set for tepid 4% growth.

According to the report, a total of 1.5 GW worth of PV systems were installed in Japan in Q1’13, up from 0.4 GW during the same time last year. Japan’s share of global PV system revenue is forecast to rise to 24% this year, up from 14% in 2012 and just 9% in 2011.

“Following the earthquake and tsunami in 2011 that led to the shutdown of nuclear facilities and a shortage of electricity, Japan has aggressively moved to promote solar energy,” says Sam Wilkinson, solar research manager at IHS.

“Japan’s government has introduced a highly attractive feed-in tariff to help stimulate solar growth,” he continues. “In contrast, the European market that historically has led global solar demand is slowing as regional market conditions become less attractive. The deceleration in Europe and the implementation of the FIT in Japan are combining to propel the country to the top of the global solar market this year.”

 

Solar Capacity
Surpassed 2 GW

The Solar Electric Power Association (SEPA) has released the full 2012 Top 10 Utility Solar Rankings Report, which ranks utilities nationally and by utility type for more than 260 of the most solar-active utilities, representing 96% of the U.S. solar electric power market.

The report analyzes the amount of new solar power interconnected by U.S. electric utilities and uncovered three key findings:

1. Annual solar capacity surpassed 2 GW for the first time in 2012.

2. The market share for large-scale solar projects grew 160% to 1.13 GW from 2011.

3. Net energy metering, or customer-sited solar, remains a large part of the solar market, accounting for 99% of newly installed projects, with the most growth concentrated in five states (California, Hawaii, Arizona, New Jersey and Colorado).

According to the report, there are more than 300,000 solar projects and approximately 6.1 GW of installed capacity in the U.S. Also, utilities reportedly purchased more than 1 GW of large-scale solar, mostly through power purchase agreements. The report says the wholesale utility market included more than 70 photovoltaic projects, including Pacific Gas and Electric’s purchase of the 250 MW Agua Caliente project.

SEPA predicts that the completion of utility-procured, large-scale solar projects in 2013 will likely surpass the solar capacity deployed by all market segments in 2012.

 

EU Duties Will
Dampen 1.3 GW

According to recently released analysis by IHS, European photovoltaic installations are forecast to fall by more than 6 GW in 2013, with 1.3 GW of this decline attributed to incoming EU anti-dumping duties on Chinese modules. Despite this dramatic fall, IHS still predicts global installations will grow at a double-digit rate to 35 GW this year, driven by a surge in demand in Asia.

In its latest quarterly analysis on global PV installation demand, IHS has cut its forecast for the second half of this year in Europe by more than 1.3 GW, citing the anti-dumping tariffs that came into force in June. As a result of these duties and several other factors, including changes to incentive systems, IHS predicts total European PV installations will fall to 11.6 GW in 2013, down 33% from 17.7 GW in 2012.

“Although the EU Commission has given a small window of opportunity by reducing the tariff to 11.8 percent for 60 days, IHS still expects dampened demand,” says Ash Sharma, senior director of solar research at IHS. “This decline comes in stark contrast to the sharp increase in module shipments from China as buyers stockpile ahead of the next tariff increase in August. As a result, IHS has cut its European forecast for the second half of 2013 by 1.3 GW - a nearly 20 percent reduction from our previous outlook.”

The analysis has found that the EU duties will accelerate the decline in European installations, with the biggest falls in Germany and Italy.

Despite this fall in European demand, IHS still predicts that the global PV market will grow in 2013, with installations hitting 35 GW, up 11% from 31 GW in 2012, with Asia becoming the driving force for growth. IHS expects installations in the region to exceed 15 GW for the first time and thus account for 45% of global demand, making the Asian market larger than Europe for the first time.

China and Japan will account for the majority of this demand, and IHS predicts they will become the two largest markets in 2013 based on volume. Japan will lead in terms of revenue, as IHS previously forecast.

 

Renewables Hit
$244 Billion

A United Nations (UN) agency and an international policy group have issued dual reports showing investments in renewable energy (excluding large hydropower) totaled $244 billion worldwide in 2012, with developing countries reaching near parity with developed ones. Wind power reportedly accounted for about 39% of added renewable power capacity, followed by small-scale hydropower and solar PV, each garnering approximately 26%.

Global solar PV capacity reached 100 GW in 2012, surpassing bio-mass to become the third largest renewable power source in operation after hydropower and wind, the reports say. Total renewable power capacity worldwide exceeded 1,470 GW in 2012, up 8.5% from 2011.

The “Global Trends in Renewable Energy Investment 2013” report, published by the UN Environment Program (UNEP), and “Renewables 2013 Global Status Report,” released simultaneously by the Renewable Energy Policy Network for the 21st Century (REN21), say last year’s investments in renewable energy declined from $279 billion in 2011 due to lower solar prices and weakened markets in Europe and the U.S. However, the overall trend is up, the reports say.

According to UNEP and REN21, renewable energy investments in developing countries amounted to $112 billion in 2012 compared to $132 billion for developed countries, a difference of 18%. By comparison, renewable energy investments in 2007 were $146 billion, with spending in developed economies 2.5 times more than in developing ones.

The reports say solar PV installations reached a record 30.5 GW worldwide in 2012, but overall investment was down from the previous year due to falling PV system prices, which dropped as much as 40%. Bargain basement prices may have sparked demand for small-scale solar, however. According to the reports, spending on projects 1 MW and smaller rose from $77 billion in 2011 to $80 billion in 2012, while spending on larger scale solar projects fell 24% to $52.7 billion.

 

Dominion Virginia
Launches Program

Dominion Virginia Power has rolled out its pilot solar purchase program. Under the plan, qualifying homeowners and businesses generate and sell electricity and solar renewable energy certificates directly to Dominion at a rate of $0.15/kWh.

Virginia’s State Corporation Commission approved Dominion’s solar purchase program in April. As a pilot program, Dominion says it will limit participation to a total of 3 MW of PV power generated statewide. Of that amount, the utility says approximately 60% will be dedicated to residential customers and 40% to non-residential. The program is currently scheduled to run for five years.

The solar purchase program is not the power company’s first foray into solar energy. In May, it selected Old Dominion University (ODU) as the first participant in its Solar Partnership Program, which seeks to build 30 MW of PV capacity on rooftops across the state. The power company says it is installing over 600 solar panels on ODU’s student recreation center this summer that will be able to generate 132 kW.

 

A ‘New Era’ For
Renewable Energy

A new era is dawning in the renewable energy industry, says Ernst & Young. According to the company’s 10th anniversary edition of the Renewable Energy Country Attractiveness Index, global annual clean energy investment totaled $269 billion in 2012, representing a five-fold increase on 2004.

The sector now competes for investment with more traditional energy sources, and new technologies - such as solar panels, biomass boilers and mini wind turbines - are enabling energy users to run their own small power plants, changing the way businesses and consumers think about energy, Ernst & Young adds.

“The renewable energy landscape today is truly global. From Japan and Southeast Asia to Africa and South America, renewable energy is a viable energy source that is gaining a solid and growing share in the energy mix,” says Gil Forer, Ernst & Young’s global cleantech leader.

“But the renewables industry is facing growing pains,” Forer notes. “Not only is the future a place with less government support, but industry players also have to fight for market share across all corners of the globe and with some worrying signs of trade barriers emerging.

“For an industry that is still relatively new, this is a seriously challenging time. Leaders need to be conversant in international business, conscious of global politics and clever in innovating new business models and business relationships to win in an increasingly global competitive world,” he adds. S