The period from 2010 to 2012 is shaping up to be one of significant transformation for the European photovoltaic industry as it confronts regulatory incentive revisions, expanding market development opportunities and scaling competition from better financed and more robust power players, according to a new report from IHS Emerging Energy Research.
Europe PV markets are forecasted to add as much as 15.5 GW from 2010 to 2012 at an average of 5 GW per year. In the longer term, the PV sector in Europe is expected to maintain its growth trajectory from an expected 6.3 GW in 2010 toward 101 GW of installed capacity by 2025.
‘In domino-like fashion, Europe's governments are revising their feed-in-tariff (FIT) schemes and permitting procedures in 2010 to keep pace with PV's rapid technology and cost advances,’ states IHS Research Director Reese Tisdale, one of the study's authors. ‘Feed-in tariffs have been instrumental in getting the European PV sector off the ground to date. These schemes are evolving rapidly in their designs to shape both the size and content of the market going forward.’
Considered the epicenter of the global PV industry, the German PV market faces significant changes in the coming months due to proposed revisions to FITs expected to be enacted by the end of 2010, the report adds. As a result, German PV development is surging ahead of the proposed tariff reductions.
While Germany is among the most cost-competitive markets in Europe, reduced FIT rates will force players to further reduce system costs. Other markets, such as Italy, Spain and the Czech Republic, are poised to follow suit with expansive tariff revisions planned for this year.
Despite tariff revisions, Germany will continue to dominate global PV build-out, and continued development in Italy, France and Belgium also will be pivotal in driving the industry forward through scale, technology improvements and deeper experience for developers, Tisdale says.
‘Europe is no longer a one-market PV industry,’ Tisdale explains. ‘With development focused almost entirely on Germany several years ago, the European PV market has now diversified to five or six active countries – ultimately, to stabilize the market and dampen risk.’
Scaling PV activity in European markets outside of Germany has propelled a new group of utilities and power players into the industry forefront. Leading utilities and renewable players Electricite de France and Enel are at the forefront of large-scale PV deployment, particularly in France and Italy, leveraging their renewables success and experience to position them for broader international competition.
As competition increases in the downstream development segment, a growing number of international suppliers are challenging the more entrenched European companies for market share. Leading this charge has been the rising presence of lower-cost Asian manufacturers.
Furthermore, the recent oversupply of the global PV module market, technology and manufacturing improvements, and economies of scale has led to a dramatic reduction in solar PV system costs in 2009 and 2010. Adding to this positive cost trend, the increased positions of larger industrial players such as Siemens, ABB and GE are expected to have an additional impact on the PV sector, according to the report.
‘Over the past 24 months, the makeup of the PV market has shifted dramatically with the growing presence of Asian suppliers squeezing traditional European suppliers,’ notes Tisdale. ‘At the heart of this change are Chinese companies – led by Suntech, Yingli, Trina, SolarFun and Canadian Solar – who are gaining market share through low-cost modules.’
Through the first quarter this year, eight of Europe's top 15 module suppliers in Europe are Asia-based – highlighting a shift toward a more global supply chain from the more entrenched German suppliers that have been so successful in the past, according to the study.