Annual solar capacity additions will rise by just 0.4 GW in 2012, with 26.9 GW expected to be installed this year, and industry revenues will fall by $18 billion to $92 billion, according to a Lux Research report.
However, new installations will rebound to 38.3 GW in 2017 as emerging markets quadruple in size. South Asia is expected to account for the majority of growth, rising from 1 GW of new installations in 2011 to 4.5 GW in 2017, and from 2017 to 2022, Southeast Asia, Africa and South America are the areas expected to grow to “gigawatt status,” the report finds.
The report, Market Size Update 2012: The Push to a Post-Subsidy Solar Industry, points out the conditions that led to a 66 percent surge to 26.5 GW of new capacity in 2011. A supply glut, caused mainly by Chinese manufacturers, possible incentive cuts in Europe and the end of the U.S. Section 1603 cash grant, fueled the frenzied pace of installations last year, Lux said.
But the expected drop-off this year does not spell doom for the industry, according to report author Matthew Feinstein.
For example, between the 2012 bust and the 2017 rebound, asset-backed securities will spur growth of the small-scale segment in the U.S. residential and commercial markets. SunPower and Wells Fargo have tested securitization and “renewable bonds” in Italy and New Jersey, and Lux Research analysts expect to see major commercial banks taking the lead in popularizing this model.
Feinstein said that past ups and downs within the industry and subsidy dependence have created a misperception of solar’s maturity and commodity status. He says extended success in the market is possible for players who take a “strategic, surgical” approach to dealing with the end of subsidies and the market’s changing geographic profile.
Photo: Lux Research