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The Rise of Photovoltaics

Did you notice something interesting recently in your local community? Roofs with solar panels are spreading rapidly as renewable energy products are becoming more efficient and mainstream. Costs for PV installations continue to drop, caused by oversupply and reduced governmental incentives. Furthermore, there is an increasingly positive consumer sentiment for renewable energy. Solar panel installations are no longer a geek gadget but more a smart investment. This applies to residential, commercial and utility-scale photovoltaic installations all around the world and especially the United States.

United States estimated to lead the change in 2012

According to a report by Greentech Media Research, the US PV market has the potential to become a truly sustainable, long-term market. With one of the largest demands for electricity in the world and large areas of sun-exposed land for PV development, the US market is one of the most attractive long-term growth opportunities for project developers, installers, financiers, and other PV service providers. According to a Barclays Capital report, North America is supposed to outperform Germany, the world’s biggest solar market by installed capacity, with regard to the number of new PV installations in 2012. Currently, the highest demand comes from states like California, New Jersey and Florida as the pie chart illustrates.

Consumers interested in solar panels, segmentation by top 7 states,

Source: panelprice.com



Lower feed-in tariffs in world’s largest PV market

Bloomberg reports that in 2012 some 4.455 Megawatt are estimated to be installed in the United States and Canada whereas Germany will fall back from a 7 GW in 2010 to 3 GW in 2012. Reason for the drop is a change in the German Renewable Energy Act (EEG). In 2010 many customers rushed to secure a 20 year guaranteed feed-in tariff before the government started to cut incentives. Early 2011, tariffs were lowered by 13%. Large-scale installations on former crop land fell completely out of the payment scheme. They were especially interesting for commercial project developers that contributed largely to Germany’s total capacity of nearly 17 GW (numbers based on German Grid Agency 2010). However, former Deutsche Bank manager and German PV veteran Thomas Steingruben is still very optimistic. The entrepreneur from Munich successfully focuses on PV development on larger commercial buildings in Germany and Italy. According to him, the worldwide module market is currently faced with oversupply, asian competitors, and the reduction of incentive schemes. “This forces panel manufacturers to lower their prices for solar modules, which makes initial PV investments more affordable, especially for home owners.” explains Steingruben.

Top 10 solar panels between January and July 2011, price variations of up to 32%

Source: panelprice.com



2011 to be a buyers’ market for PV installations

Marketing and pricing experts at PanelPrice.com, a online solar panel comparison service for home owners, also confirm that solar panel prices are falling. Since early 2010, retail prices for popular panels dropped by up to 20%. While Suntech Power or Trina Solar were delivering the best prices, interestingly, half of consumers preferred panels by Kyocera Solar, Sharp and Solarworld. The site argues that this has to do with branding and marketing effects instead of pure pricing. Larry Hagman, known for his role in the TV series Dallas as an oil tycoon, recently signed a contract for a solar energy TV advertisement promoting Solarworld. Yingli was sponsor of the soccer world championship 2010 in South Africa and has partnered with US Soccer to support the Mens’, Womens’ and Youth National Teams until 2014. Solar panel advertising has hit the mainstream and manufacturers target consumers to build brand awareness in order to drive direct sales and indirect demand through solar installers.

Positive outlook for the future

At present, solar PV is only a profitable invest for homeowners and project developers because of feed-in tariffs. They are the “lifeblood” of the industry. However, prices of PV systems will continue to drop because the industry is forced to become more efficient and independent without governmental subsidies. According to an Ernst & Young report, the typical cost of a PV panel installation has already decreased from more than $2 per unit of generating capacity in 2009 to about $1.50 in 2011. The report expects that those rates of decline will continue, with costs falling somewhere to the $1 mark in 2013. The outlook is positive. Prices are already falling based on standard technologies. What will happen as soon as new products hit the markets that have higher energy conversions and are cheaper to produce? Thin-film is certainly one of the most promising technologies. Improvements are also made in the field of microinverter and power optimizer technology. It is very likely that falling solar energy prices and rising fossil fuel prices will make small and large-scale installations cost-competitive without government sooner than assumed ushering a new age of energy production.

Jens Bonerz is founder of Germany-based Hightech Marketing Group (HMG). HMG created PanelPrice.com, the first price comparison website fully dedicated to solar panels. Jens studied business administration majoring SME management and has a professional background in marketing for industrial and high-tech products in the semiconductor industry, renewable energy sector as well as nanotechnology.

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