The renewable landscape: solar at the threshold

Publication Date	May 2009
Publisher	Datamonitor
Product Type	Report
Pages	46
ISBN Number	not applicable
Product Code	DAT15142

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Summary

Solar energy is the most abundant source of renewable power available globally, yet its widescale deployment has progressed only very slowly. Despite the depressed outlook in 2009, solar energy promises significant medium and long-term growth opportunity. Yet, until true demand-pull can be created, the industry remains at the mercy of government programs that drive artificially stimulated demand.

Ten years worth of annual global power output data, for both conventional and all mainstream renewable technologies.
Global cumulative and new annual installed solar capacity data since 1998 and a breakdown of the ten largest markets across both metrics.
Summary data relating to PV production costs, plant costs, solar electricity generating costs and the main direct and indirect subsidy mechanisms.
A SWOT analysis, an overview of the embattled Spanish market, 2009 solar market growth estimates and a review of growth expectations to 2013.

2008 was an exceptional year for the PV market, driven by political will and strong subsidies, mainly in Spain and Germany. However, a change in the Spanish solar subsidy is now threatening the development of an entire sector. At best, solar PV market growth in 2009 will fall back to 2001 levels the lowest levels on record for the past decade.

There are nine main EU-sponsored mechanisms that promote the development of solar power by means other than direct subsidy, yet the direct subsidy feed-in tariff is the most powerful mechanism to rapidly grow grid-connected solar power markets. Under the best possible scenario, however, solar energy is still a few years away from true grid parity.

Solar energy is one of only three means of achieving the EU's 20-20-20 climate change ambitions. Solar also has a role to play in meeting future increases in power demand across EU Member States. Ultimately, growth levels are expected to pick up in 2010, yet the industry's target of 12% of final EU electricity demand by 2020 are unlikely to be met.

Quickly determine and assimilate the most critical developments and issues that characterize the global solar market today and in years to come.
Benchmark the relative appeal of solar energy against other renewable and conventional types of power generation.
Understand how global growth will be impacted by technology maturity, policy incentives and investor appetite, and tailor your strategy accordingly.

Content

DATAMONITOR VIEW
CATALYST
SUMMARY
SOURCES
ANALYSIS
- Solar operates in a dynamic environment in which long-held assumptions are being eroded
- The global renewable energy industry is growing rapidly on the back of political will, subsidies and technological advancements
- Long derided as uneconomic, the nascent solar PV market is also gaining significant ground thanks to its strong green credentials
- 2008 was an exceptional year for the global PV market, driven by political will and strong subsidies, mainly in Spain and Germany
- Silicon wafer-based PV, thin-film PV and concentrated solar thermal power are competing for cost leadership
- There has been a lack of solar thermal investment over the past 20 years, but conditions now seem right for it to prosper
- As technologies improve and the cost of fossil fuel electricity rises, solar energy gets closer to grid parity
- The extent and speed of this emerging sector's growth is dependent on political frameworks and its ability to keep driving down the cost of solar power
- There are nine main EU-sponsored mechanisms that promote the development of solar power by means other than direct subsidy
- Still, the direct subsidy FiT is the most powerful mechanism to rapidly grow grid-connected solar power markets
- Solar technologies are still expensive and, for the moment, remain more expensive than most competing technologies
- For solar power generation, true grid parity depends upon the evolution of solar power costs, carbon costs and power prices
- Strong global growth is likely to continue on the back of technology maturity, policy incentives and heightened investor appetite, yet the industry's 2020 targets are unlikely to be met
- Having developed at a rapid pace, solar now faces key challenges, many of which will be offset by even larger opportunities
- A change in Spanish solar subsidy levels is threatening the development of an entire and largely undiversified industry
- At best, global solar PV market growth in 2009 will fall back to 2001 levels-the lowest levels on record for the past decade
- In the longer term, solar has a role to play in meeting future sustained increases in power demand across EU27 Member States
- Attitudes and behaviors will continue to be aligned with the benefits that zero carbon solar energy can bring
- To offset tight capacity margins, solar power generation can be deployed more rapidly than conventional power generation
- Most importantly, solar energy is one of only three means of achieving the EU's 20-20-20 climate change political ambitions
- Growth levels are expected to pick up in 2010, yet the industry's target of 12% of final EU electricity demand by 2020 will not be met
- Ask the analyst
- Datamonitor consulting
- Disclaimer
List of Figures
- Figure 1: Wind power, biomass and solar have been the real driving forces behind the growth in renewable power generation
- Figure 2: The global solar PV market has been booming over the last decade and is likely to continue this trend in the coming years
- Figure 3: In 2008, with more than 5.6GW of installed capacity, the global solar PV market had more than doubled compared to 2007 (2.4GW)
- Figure 4: Technology advances and changing industrial processes are driving costs down and PV adoption (notably thin film) up
- Figure 5: There is little doubt that, with sufficient investment, solar thermal generation can ultimately provide an economical source of power
- Figure 6: For solar power to reach grid parity, production costs need to be reduced considerably so that it can penetrate the major electricity markets
- Figure 7: Currently, RES targets contribute most to the development of solar energy
- Figure 8: Direct subsidy FiTs also facilitate R&D funding, greater solar production levels and lower costs
- Figure 9: California-one of the most favorable regions for solar power generation-had comparatively high installation costs in 2007
- Figure 10: In 2007, solar power generation in California was still a few years away from true grid parity
- Figure 11: A SWOT analysis reveals several challenges which are expected to be offset by even larger opportunities in years to come
- Figure 12: The economic downturn and the Spanish market freeze will cause a drop in market growth: +4,620MW forecast in 2009 (+5,559MW in 2008)
- Figure 13: Over the next seven years, power consumption levels are expected to rise in all but two European countries
- Figure 14: Member States highlighted in the top-right hand corner show concern about global warming and are willing to act accordingly
- Figure 15: Solar can play a part in offsetting tight capacity margins in countries such as Finland, Slovakia and Hungary (2008 capacity margin data)
- Figure 16: In 2008, solar, wind and energy efficiency measures failed to meet EU emission targets: EU ETS installations were short by 145mt CO2
- Figure 17: It is estimated that, with adequate support mechanisms, the market can grow at an annual average of 32% from 2008 to 2013