Isra-Mart srl: Solar revenues to dip ahead of long-term gains

www.isra-mart.com
The solar industry will experience a rollercoaster few years as revenues dip ahead of a rapid recovery, according to a major new study from analyst firm Lux Research, which predicts the market will contract from $64.4bn in 2010 to $56.9bn next year, before recovering to more than $65bn by 2016.

The report, which analyses the cost of solar power and rate of return from solar investments across 156 countries, argues that scaling back subsidies in core European markets has resulted in a period of oversupply that has forced down the price of solar panels – a trend that is likely to continue as solar technologies improve.

As a result, the value of the market is expected to fall, despite continued increases in the rate of solar installation, driven in large part by incentive schemes in Japan, China, India and North America.

"The global solar market for grid-connected systems will grow from 15.8GW in 2010 to 37.5GW in 2016, a compound annual growth rate of 15.5 per cent," said Lux Research Analyst Matt Feinstein, in a statement. "However, price declines will outpace volume increases, at least at first – the industry will actually shrink on a revenue basis – from $64.4bn in 2010 to $56.9bn in 2012 before recovering to $65.4bn in 2016."

Significantly, the research backs up predictions from solar manufacturers that solar energy will be able to compete on price with conventional power by the second half of the decade – a scenario known as "grid parity".

The report predicts that 10 states or nations will see commercial rooftop installations reach grid parity by 2016, while seven residential markets will achieve the landmark by the same date, including Hawaii, Italy, Denmark and the Ukraine.

In an another encouraging development for solar manufacturers the report suggests that subsidies or grid parity are not always necessary for solar markets to prosper, as demand can increase as a result of an anticipated future increase in the cost of conventional energy.

The study cites the example of Brazil, where investors in solar installations are expecting to see rates of return of 12 per cent on commercial scale arrays by 2016, despite the absence of a subsidy and the expectation that grid parity will take several more years to materialise.

The report will also provide further ammunition to campaigners in the UK who have roundly criticised the government for cutting incentives for large-scale solar installations earlier than expected and are currently urging ministers not to impose further deep cuts when they review the UK's feed-in tariff incentive scheme next year