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James Burgess

James Burgess

James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…

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Italy Overtakes Germany as the Largest Solar Market in the World

According to Dr. Henning Wicht, director and principal analyst for photovoltaics at IHS (a global information and analysis provider), "propelled by residential and institutional investors who support green initiatives as well as sustainable funding, Germany has been the world's leading country for PV installations since 2009,” however, they may be about to lose that spot to the previous runner-up, Italy.

The new PV solar systems installed in Germany are down 20% from 7.4GW last year to 5.9GW in 2011. Demand in Germany dropped due to high module prices at the beginning of the year, and although a mini-boom was seen in October, November and December due to reduced system prices and changes of tariffs expected in January 2012, it was not sufficient to generate growth for the whole year. Whereas Italy, due to attractive tariffs and changing subsidy schemes from the government in Rome, are set to install 6.9GW this year, up nearly 50% from 2010.

Global installations in 2011 is expected to reach 23.8GW, up 34% from last year, and following behind Italy and Germany as the top solar energy markets are; the United States with 2.7 GW; China with 1.7 GW; Japan with 1.3 GW, and France in sixth with approximately 1.0 GW.

Basic economics generally states that as demand increases an increase in price will follow, however 2011 has seen component prices decline drastically, with the IHS predicting that module prices could drop to €0.65 ($0.80) per Watt in March 2012.

Again, according to economic law, as prices fall demand should rise, but unfortunately this will not necessarily be the case. The prices are set to fall too low. The intense competition in the PV market will push gross profit margins into the single-digit range, and even the top, most efficiently productive companies will struggle to escape the pressure brought by these margins. Many manufacturers will have to increase productivity and performance without increasing their spending, just to stay profitable. For example, American manufacturer First Solar Inc. has already chosen to postpone the commissioning of a solar plant in Vietnam.

Eventually of course the market will level out, demand is predicted to pick up and the prices should then stabilise at about €1.50 per Watt for ground and €1.80 for rooftops.
Worldwide demand is also expected to pick up by April 2012, driven by the increased demand in Europe as well as by supportive local programs to be commissioned in China and the emergence of new markets such as India. A healthier business environment could well dawn on the PV industry by the end of the first half of 2012, but only if demand returns as a reaction to the low market prices.

By. James Burgess of Oilprice.com




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