A bright 2012
Publication date: 3 January 2012
Author: Heinz Ossenbrink, Head of the Renewable Energy Unit, Institute for Energy and Transport of the European Commission’s Joint Research Centre and Arnulf Jäger-Waldau, Scientific Officer and Senior Scientist at the Commission’s Renewable Energy Unit
Estimates for global solar cell production1 in 2011 vary between 28GW and 34GW. The significant uncertainty in the data for 2011 is due to the very competitive market environment, as well as the fact that some companies report shipment figures, others report sales and again others report production figures. The continuation of the difficult economic situation worldwide, as well as a fierce competition and a production capacity which is more than twice the actual market, led to a decreased willingness to report confidential company data. The previous tight silicon supply situation reversed due to massive production expansions as well as the economic situation. This led to a price decrease from the 2008 spot market peak of around 50 $/kg to about 30 $/kg at the end of 2011.
The presented data, collected for more than 300 companies from their respective financial reports and colleagues were compared to various data sources and thus led to an estimate of 30GW, representing a production increase of about 20 per cent compared to 2010.
The change of the market from a supply restricted – to a demand-driven market and the resulting overcapacity for solar modules has resulted in a dramatic price reduction of PV systems of more than 50 per cent over the last four years. Average prices for grid connected PV systems were reported with 2,560 $/kWp (1,900 €/kWp) for residential and 2,370 $/kWp (1,760 €/kWp) for commercial systems2.
Predictions for the 2011 PV deployment market vary between 21.1GW and 24.0GW with a consensus value in the 23GW range. For 2012 analysts expect a flat market with about the same volume or a moderate one digit growth. Despite these forecasts, massive capacity increases are still ongoing or announced and if all of them are realised, the worldwide production capacity for solar cells would exceed 60GW at the end of 2011 and 80GW at the end of 2012. This indicates that even with the optimistic market growth expectations, the planned capacity increases are way above the market growth. The consequence would be either low utilisation rates or the build up of high inventories resulting in a continued price pressure in an oversupplied market. Such a development will accelerate the consolidation of the photovoltaics industry and spur more mergers and acquisitions.
Despite the fact that a significant number of players announced a scale back or cancellation of their expansion plans for the time being, the number of new entrants into the field, notably large semiconductor or energy related companies, overcompensated this. The announced production capacities increased again in 2011. It is important to note, that production capacities are often announced, taking into account different operation models such as number of shifts, operating hours per year, etc. In addition the announcements of the increase in production capacity do not always specify when the capacity will be fully ramped up and operational. This method has of course the setback that a) not all companies announce their capacity increases in advance and b) that in times of financial tightening, the announce – ments of the scale back of expansion plans are often delayed in order not to upset financial markets. Therefore, the capacity figures just give a trend, but do not represent final numbers.
If all these ambitious plans can be realised by 2015, China will have about 50.8 per cent of the world-wide production capacity of 112GW, followed by Taiwan (15.2 per cent), Europe (7.6 per cent) and Japan (6.3 per cent).
All these ambitious plans to increase production capacities at such a rapid pace depend on the expectations that markets will grow accordingly. This, however, is the biggest uncertainty as the market estimates for 2011 and 2012 vary between 21GW and 25GW with a consensus value in the 23 and 24GW range respectively. In addition, most markets are still dependent on public support in the form of feed-in tariffs, investment subsidies or tax-breaks.
The current solar cell technologies are well established and provide a reliable product, with sufficient efficiency and guaranteed energy output for at least 25 years of guaranteed power output. This reliability, the increasing potential of electricity interruption from grid overloads, as well as the rise of electricity prices from conventional energy sources, add to the attractiveness of photovoltaic systems.
More than 80 per cent of the current production uses wafer-based crystalline silicon technology. A major advantage of this technology is that complete production lines can be bought, installed and be up and producing within a relatively short time-frame. This predictable production start-up scenario constitutes a low-risk placement with calculable return on investments. However, the temporary shortage in silicon feedstock and the market entry of companies offering turn-key production lines for thin-film solar cells led to a massive expansion of investments into thin-film capacities between 2005 and 2010.
More than 200 companies are involved in thin-film solar cell activities, ranging from basic R&D activities to major manufacturing activities and over 150 of them have announced the start or increase of production. If all expansion plans are realised in time, thin-film production capacity could be around 17GW, or 19 per cent of the total 88GW, in 2012 and about 27GW, or 24 per cent, in 2015 of a total of 112GW. The first thin-film factory with 1GW production capacity became operational in 2010.
The technologies of the majority of the companies are silicon based and use either amorphous silicon or an amorphous/ microcrystalline silicon structure. 30 companies announced using Cu(In,Ga)(Se,S)2 as absorber material for their thin-film solar modules, whereas nine companies use CdTe and eight companies go for dye and other materials.
Similarly to other areas of technology, new products will enter the market, enabling further cost reduction. Concentrating Photovoltaics (CPV) is a new emerging market. There are two main tracks – either high concentration > 300 suns (HCPV) or low to medium concentration with a concentration factor of two to approxi mately 300. In order to maximise the benefits of CPV, the technology requires high Direct Normal Irradiation (DNI) and these areas have a limited geographical range – the ‘Sun Belt’ of the Earth.
Within CPV there is a differentiation according the concentration factors3 and whether the system uses a dish (Dish CPV) or lenses (lens CPV). The main parts of a CPV system are the cells, the optical elements and the tracking devices. The recent growth in CPV is based on significant improvements in all of these areas, as well as the system integration. However, it should be pointed out that CPV is just at the beginning of an industry learning curve with a considerable potential for technical and cost improvements. The most challenging task is to become cost competitive with other PV technologies quickly enough in order to use the window of opportunities for growth.
More than 50 companies are active in the field of CPV development and almost 60 per cent of them were founded in the last five years. Over half of the companies are located in the United States of America (primarily in California) and Europe (primarily in Spain).
The growth of these technologies is accelerated by the positive development of the PV market as a whole. With market estimates for 2010 in the 10 to 20MW range, the market share of CPV is still small, but already for 2011 about 50 to 100MW are expected and there is a wide consensus amongst consultancies and market analysts that CPV will reach a GW market size by 2015.
The existing photovoltaic technology mix is a solid foundation for future growth of the sector as a whole. No single technology can satisfy all the different consumer needs, ranging from mobile and consumer applications with the need for a few watts to multi MW utility-scale power plants. The variety of technologies is an insurance against a roadblock for the implementation of solar photovoltaic electricity if material limitations or technical obstacles restrict the further growth or development of a single technology pathway.
After a doubling of the worldwide photovoltaic market in 2010 the market is estimated to grow again by about 30 per cent to about 23GW in 2011. This mostly represents the grid connected photovoltaic market. To what extent the off-grid and consumer product markets are included is not clear, but it is believed that a substantial part of these markets are not accounted for as it is very difficult to track them. A conservative estimate is that they account for approximately 400 to 800MW (approximately 1-200MW off-grid rural, approximately 1-200MW communication/ signals, approximately 100 MW off-grid commercial and approximately 1-200MW consumer products). #With a cumulative installed capacity of over 46GW, the European Union is leading in PV installations with a little more than 70 per cent of the total worldwide 63GW of solar photovoltaic electricity generation capacity at the end of 2011.
Asia and Pacific
The Asia and Pacific region shows an increasing trend in photovoltaic electricity system installations. There are a number of reasons for this development, ranging from declining system prices, heightened awareness, favourable policies and the sustained use of solar power for rural electrification projects. Countries such as Australia, China, India, Indonesia, Japan, Malaysia, South Korea, Taiwan, Thailand, The Philippines and Vietnam show a very positive upward trend, thanks to increasing governmental commitment towards the promotion of solar energy and the creation of sustainable cities.
The introduction or expansion of feed-intariffs is expected to be an additional big stimulant for on-grid solar PV system installa – tions for both distributed and centralised solar power plants in countries such as Australia, Japan, Malaysia, Thailand, Taiwan and South Korea.
In 2010 about 2.5GW of new PV electricity generation systems were installed in the region. The largest market was Japan with 990 MW followed by the China with 560MW and Australia with 380MW. For 2011 a market increase to about 5GW is expected, driven by the major market growth in China (2GW), India, Japan, Malaysia and Thailand. Market expectations for the region range between 7 to 8GW in 2012.
The Asian Development Bank (ADB) launched an Asian Solar Energy Initiative (ASEI) in 2010, which should lead to the installation of 3 GW of solar power by 20124. In their report, ADB states: Overall, ASEI aims to create a virtuous cycle of solar energy investments in the region, toward achieving grid parity, so that ADB developing member countries optimally benefit from this clean, inexhaustible energy resource.
Market conditions for photovoltaics differ substantially from country to country. This is due to different energy policies and public support programmes for renewable energies and especially photovoltaics, as well as the varying grades of liberalisation of domestic electricity markets. After a tenfold increase of solar photovoltaic electricity generation capacity between 2001 and 2008, the newly installed capacity more than quadrupled in the last three years to exceed 46GW cumulative installed capacity at the end of 20115,6.
The legal framework for the overall increase of renewable energy sources was set with the Directive 2009/28/EC, and in their National Renewable Energy Action Plans (NREAPs), 26 Member States have set specific photovoltaic solar energy targets, adding up to 84.5GW in 2020. However, since the submission of the NREAPs in 2010 a number of positive signs have emerged for PV. In Italy, the 4th Conto Energia was enacted in the first half of 2011 and it limits the support for PV installations until 2017 or 23GW whatever is reached earlier. In August 2011 Greece announced the ‘Helios’ project, which aims to install up to 10GW of PV electricity systems on public land by 2020. These developments indicate that the targets set in the NREAPs should be seen as the guaranteed minimum and not the overall goal.
In 2011 Italy overtook Germany as the biggest market with an expected new connected capacity of 8.2GW versus 5.2GW respectively. The market growth in these two countries is directly correlated to the introduction of the Renewable Energy Sources Act or Erneuerbare Energien Gesetz (EEG) in Germany in 2000 and the Conto Energia in Italy in 2005.
In 2010, Canada more than tripled its cumulative installed PV capacity to about 420MW, with 300MW new installed systems. For 2011 a further increase of the market to 350 to 400MW is estimated. This development is driven by the introduction of a feed-in tariff in the Province of Ontario in 2009.
With close to 900MW of newly installed PV capacity, the USA reached a cumulative PV capacity of 2.5GW at the end of 2010. Utility PV installations more than tripled compared to 2009 and reached 242MW in 2010. The top 10 States – California, New Jersey, Nevada, Arizona, Colorado, Pennsylvania, New Mexico, Florida, North Carolina and Texas accounted for 85 per cent of the US grid-connected PV market7. For 2011 an increase of the US market to 1.6GW is estimated.
PV projects with Power Purchase Agreements (PPAs), with a total capacity of 6.1GW, are already under contract and to be completed by 20148. If one adds those 10.5GW of projects which are already publicly announced, but PPAs have yet to be signed, this makes the total ‘pipeline’ more than 16.6GW.
Many State and Federal policies and programmes exist and one of the most comprehensive databases about the different support schemes in the US is maintained by the Solar Centre of the State University of North Carolina. The Database of State Incentives for Renewable Energy (DSIRE) is a comprehensive source of information on State, local, utility, and selected Federal incentives that promote renewable energy. All the different support schemes are described therein and it is highly recommended to visit the DSIRE web-site http://www.dsireusa.org/ and the corresponding interactive tables and maps for details.
The 2012 market expectations for Canada and the USA together vary between 3.5 and 5GW.
The photovoltaic industry has changed dramatically over the last few years. China has become the major manufacturing place followed by Taiwan, Germany and Japan. Amongst the 15 biggest photovoltaic manufacturers in 2010, only three had production facilities in Europe, namely First Solar (USA, Germany and Malaysia), Q-Cells (Germany and Malaysia) and Solarworld (Germany and USA).
Looking at photovoltaics it is important to remember, that the PV industry is more than just cell and module manufacturing and to grasp the whole picture one has to look at the whole PV value chain. Besides the information in this paper about the manufacturing of solar cells, the whole upstream industry (e.g. materials, polysilicon production, equipment manufacturing), as well as the downstream industry (e.g. inverters, BOS components, system development, installations) has to be looked at as well.
Various renewable energy scenarios including the International Energy Agency (IEA) and the European Renewable Energy Council (EREC) have been published over the years. So far the growth and contribution of photovoltaic electricity generation has been underestimated by every scenario.
The latest scenarios by the IEA, Greenpeace and EREC9,10,11 predict shares of photovoltaic electricity between 10 and 18 per cent of the electricity supply worldwide and up to 27 per cent in Europe.
With over 60GW cumulative installed photovoltaic electricity generation capacity installed worldwide by the end of 2011, photovoltaics is still a small contributor to the electricity supply, but its importance for our future energy mix is finally acknowledged.
1. Solar Cell production capacities mean; -In the case of wafer silicon based solar cells on the cells -In the case of thin-films, the complete integrated module -Only those companies which actually produce the active circuit (solar cell) are counted -Companies which purchase these circuits and make modules out of them are not counted.
2. PV News, published by the Prometheus Institute, ISSN 0739-4829
3. High concentration > 300 suns (HCPV) Medium concentration 5< x < 300 suns (MCPV Low concentration < 5 suns (LCPV).
4. Asian Development Bank, Asia Solar Energy Initiative: A Primer, ISBN 978-92-9092-314-5, April 2011
5. German Federal Network Agency (Bundesnetzagentur), EEG Data 5 November 2011
6. Gestore Servici Energetici, Il contatore fotovoltaico, 27 November 2011
7. Solar Energy Industry Association (SEIA), U.S. Solar Market Insight, US Solar Industry Year in Review 2010
8. The US PV Market in 2011 – Whitepaper, 2011, Greentech Media Inc., Enfinity American Corporation
9. International Energy Agency, 2010, PV Technology Roadmap
10. Greenpeace International, European Renewable Energy Council (EREC), 2010, energy revolution, June 2010
11. RE-thinking 2050 – A 100% Renewable Energy Vision for the European Union, European Renewable Energy Council (EREC)
About the Authors
Dr. Arnulf Jäger–Waldau is a Scientific Officer and Senior Scientist at the Renewable Energy Unit, Institute for Energy and Transport of the European Commission’s Joint Research Centre since 2001. He works on the assessment of renewable energy technologies, the effectiveness of their implementation and their integration into energy infrastructures. Since 1987 he has worked in the field of material research for solar cells and holds patents on semiconductor material deposition for thin film solar cells and solar module design. Dr. Jäger-Waldau was a Lead Author for Solar Energy of the new Special Report of the IPCC on Renewable Energy and Climate Change Mitigation, which was approved by the General Assembly of the IPCC in May 2011. He serves as a member of the Executive Committee of the European Materials Research society (E-MRS), member of the Academic Advisory Board of the Chinese Trina State Key Laboratory for Photovoltaics, member of the International Advisory Board of the Warsaw University Photovoltaic Centre and member of the Scientific Advisory Board of the Solar Research Centre of the Bulgarian Academy of Science. He is the Technical Chairperson of the 27th European Photovoltaic Solar Energy Conference and Exhibition (EU PVSEC) in Frankfurt 2012 and is the designated Chairman of the 2013 E-MRS Spring Meeting in Strasbourg.
Dr. Heinz Ossenbrink, born in 1951, has a PhD in Nuclear Physics from Hahn Meitner Institute, Berlin and joined the European Commission’s Joint Research Centre in 1982. He built up the JRC’s activity on Photovoltaics when Europe started its research and pilot programme for Photo – voltaic systems. In 1995 he became Head of the Unit for Renewable Energy, and expanded research and support activities to Energy Efficiency and Bio-Energy, notably Biofuels. His work is dedicated to the scientific support of EU legislation for Renewable Energies. Since 1982 he hass contributed to the standards work of the IEC TC82, Solar Photovoltaic Systems, in particular regarding calibration of reference cells and lifetime testing of PV modules. He became Chairman of this Technical Committee in 2005 and was recently confirmed for his second term. His many publications cover measurement and testing methods for photovoltaic generators, economic assessment of renewable energy and impacts of extended bio-fuel use.
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