CLIMATE SPECTATOR: The great solar switch

The shift in solar PV demand leadership from Europe to Asia Pacific has been rapid, and is due to the growth in APAC rather than falls in Europe.

Climate Spectator

Europe’s dominance of the solar market is so last year, according to new figures from a leading solar analyst. The data on PV demand, from NPD Solarbuzz, suggests the Asia Pacific region – which is dominated by China, Japan, India and Australia – will storm clear of Europe in the fourth quarter of this year.

While we have known for some time that Europe has been overtaken by China when it comes to manufacturing, the demand situation has taken a little longer to turn. But with China and Japan leading the way on the back of supportive government policies, PV demand from the Asia Pacific region is forecast to grow by 80 per cent in the second-half of this year.

In all, the growth will see fourth quarter demand of around 5.3 GW. And while growth surges in the region, Europe is slipping back as subsidies work their way out of the policy agenda and the recession continues to weigh.

"Strong growth in APAC and other emerging PV markets is providing new impetus for companies active within downstream PV segments,” Wolfgang Schlichting, Research Director at NPD Solarbuzz, says.

"However, in established PV markets, the short-term business environment will remain challenging for the remainder of 2012, with continued reductions in incentive policies and uncertainties due to the ongoing trade disputes.”

The extent of the leadership transition is best illustrated by the graph below, with APAC’s share of demand soaring from under 5 per cent in the fourth quarter of 2010 to an expected level just below 20 per cent in the December quarter of this year.

Figure 1: Shift in demand from Europe to APAC

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Source: NPD Solarbuzz European PV Markets Quarterly and Asia Pacific Major PV Markets Quarterly

The Asia Pacific region saw year-on-year growth of 60 per cent in the second quarter of this year, according to the analysts, with China’s PV demand surging over 300 per cent to 0.6 GW. Japan, meanwhile, will introduce the world’s most generous feed-in tariff scheme for solar later this year, setting up what is likely to be a massive growth spurt in demand before year’s end.

Manufacturer pain

Despite the growth rates in APAC, the analysts were circumspect on the potential for major profit benefits for suppliers.

With a glut of supply still forcing prices lower, margins will remain tight and ensure volume lifts will offer very little in the way of profit.