Incentive cuts initiate PV market shift

Continued government policy adjustments are causing major shifts in the sizes, growth rates and customer segment mix of photovoltaic markets in 2011, according to the conclusions of three new Regional Downstream PV Market reports issued by Solarbuzz.

Specifically, European markets, led by Germany and Italy, have absorbed feed-in tariff (FIT) rate cuts of up to a third between 1 January 2010 and 1 July 2011. These reductions have caused Q1’11 demand in Germany, the world’s largest PV market, to collapse to less than half its Q1’10 size.

In addition, overall European full-year demand is expected to flatten in 2011 after increasing more than 170% from 2009 to 2010.

These policy adjustments have particularly hit large ground-mount systems on agricultural land. Even though investment returns across the range of residential and commercial roof-mounted installations remained attractive in 1H’11, end users did not start to respond to fast-falling prices until June.

Europe is now projected to represent 65% of world PV demand in 2011, down from 82% in 2010, while the US will grow from 5% to 9%. The top five Asia-Pacific markets led by Japan and China accounted for 11% of global demand in 2010, a share that will grow to 16% in 2011.

The market share of these Asia-Pacific countries is projected to increase steadily to reach at least 26% by 2015, while the US share rises to 14% by that year.

In contrast to the European challenges, PV project pipelines in the US, China and India collectively now stand at 25 GW.