BOULDER, Colo. — One of the primary drivers for growth in the solar market has been financial incentives, typically government-funded ones. According to a report from Pike Research, as such incentives are reduced in some major markets, other factors — in particular price reductions, new residential financing mechanisms, and third party ownership models — will become the key drivers for the solar photovoltaic (PV) market for the foreseeable future.

Between 2006 and 2010, total global capacity of many renewable energy technologies — including solar PV, wind power, concentrated solar power (CSP), solar water heating systems, and biofuels — grew at rates ranging from around 15 percent to nearly 50 percent annually, says Pike Research. Solar PV, the dominant form of renewable distributed energy generation, increased the fastest of all renewable technologies during this period. In 2010, the solar PV market grew at a rate of 72 percent, illustrating the acceleration of solar PV deployment worldwide.

Pike Research forecasts that the distributed solar energy generation market will increase from approximately $66 billion in 2010 to more than $154 billion annually by 2015, a compound annual growth rate (CAGR) of 18 percent. During that period, the firm expects total installed capacity of distributed PV to rise from 9.5 gigawatts (GW) to more than 15 GW.

“Solar PV capacity was added in more than 100 countries during 2010, and a similar number in 2011,” said research analyst Dexter Gauntlett. “The market is led by residential and commercial grid-connected PV systems and is concentrated in regions with favorable financial incentives, such as premium feed-in tariffs for PV, including Germany, Italy, France, Czech Republic, Japan, Canada, and the United States, led by California.”

Markets that are dependent on financial incentives, however, can shift suddenly. In 2008, a 500 megawatt (MW) cap in the tariff caused the Spanish PV market to collapse, creating a glut of solar PV modules on the market. Germany, the largest market for solar PV systems, recently cut its tariff as well. Using the lessons learned from these markets, other countries are proceeding more cautiously in incorporating caps, local content rules, and restrictions into their programs to help predict and manage the costs.

Publication date: 04/30/2012