The report addresses the threat to European equipment manufacturers from lower cost sources.Solar photovoltaic (PV) module prices have fallen due to an oversupply of modules and lower demand from some European markets. Technology improvements and increased silicon production are also behind the drop in PV module prices. Also, lower feed-in tariff rates are reducing demand for solar PV modules, leading to further pressure on prices.Investments in renewable energy technologies globally increased by 5% in 2011 from 2010 levels, largely led by a 36% increase in investments in solar power technologies. However, the impact of stimulus funding will likely weaken beginning in 2012 as governments (specifically in the western world) reduce spending owing to budget constraints.What are the technology improvements in the solar sector and how will they lower costs and improve efficiency?What are the trends in the cost of solar PV systems? When will solar PV achieve grid parity?What is happening to feed-in tariffs?
OVERVIEW
•Catalyst
•Summary
EXECUTIVE SUMMARY
•Falling costs are making solar investments more attractive, but funding investments is difficult due to the weak economic outlook
ANALYSIS
•Oversupply and reducing demand drive down solar photovoltaic module prices
•Solar PV may attain grid parity in all segments by 2020, starting with the commercial segment in Italy by 2013
•Reduction of FiTs for solar PV in some key markets
– Germany moved from a scheduled reduction of tariffs to a more market-linked mechanism
– Italy adopted reducing tariffs based on installation volume coupled with a cap on annual installation volume
– Spain reduced tariffs with retroactive effect
– Czech Republic slashed tariffs by half
– The UK reduced tariffs by half, but protects the interests of existing operators
•The growth of renewable energy investments continues, but will likely face challenging times ahead
•Rising cost of debt in Europe
OUTLOOK
•The need for energy security and European Union 20-20-20 legislation will ultimately drive European solar
•Germany is the largest market for solar photovoltaic in Europe, and its exit from nuclear will be a strong driver for solar moving forward
•Spain leads the way in concentrated solar thermal power, and will continue to do so due to the country’s DNI levels and favorable support schemes
•German solar cell manufacturers face the biggest threat from Asian manufacturers, so must compete by producing advanced technologies
•Emerging solar PV markets in Europe need strong policy certainty to gain investor confidence
APPENDIX
•Background
– Parabolic trough plants are the most common concentrated solar power technology
– Crystalline solar photovoltaic cells dominate, whereas thin-film technologies are better suited to very hot climates
•Definitions
•Methodology
•Bibliography
•Further reading
•Ask the analyst
•Datamonitor consulting
•Disclaimer
TABLES
•Table: Solar PV grid parity timeline estimates, 2011
FIGURES
•Figure: Solar PV module retail prices (per Watt Peak), January 2011 to January 2012
•Figure: European PV levelized cost of electricity range projection by segment (€/kWh), 2010–20
•Figure: Global total new investment in renewable energy ($bn), 2007–11
•Figure: Cost of debt broken down, January 2005 to January 2011
•Figure: All Renewables Attractiveness Index, November 2011
•Figure: DNI levels across Europe
•Figure: Global existing and added solar PV capacity, 2006–10
•Figure: EU CSP installed capacity (MW), 2007–10
•Figure: Summary of different concentrated solar power technologies
•Figure: Images of main solar thermal energy types
•Figure: Types and sub-types of solar PV technologies, 2011
