Twelve months ago in this MarketWatch I wrote about the incredible growth the market had seen and how optimistic and upbeat suppliers were about the future.
Now, the market has grown again - we estimate by 27% to 24GW - but the industry is now in turmoil. At the start of 2011, a shutdown in two of the largest markets, Italy and Germany, led to massive oversupply and collapsing prices. This was true both for panels, but also, for the first time, for inverters too. As a result we've seen many large panel companies shut down plants and some file for bankruptcy. The end of 2011 will see some significant cuts to PV incentives in many of the major markets, including Germany and the UK. Germany will be a making a scheduled 15% cut to its feed-in tariff, whilst the UK has brought forward a review of its incentives amidst fears of overheating and looks set to make a 50% cut to tariffs in December. Italy, which has been a key driver of growth this year, is rumoured to be set for further reductions due to a rapidly diminishing budget because of its oversubscribed feed-in tariff and its sovereign debt problem. Similarly the USA, which installed at least 2GW this year, has a very uncertain future. Its Federal "1603 cash grant" and investment tax credit scheme has helped drive installations but is due to change at the end of 2011. But despite all the doom and gloom, the PV industry still has an incredibly positive future. Its share of total electricity supply is still tiny and its potential to scale and expand to fill the growing energy deficit is massive. Costs have fallen rapidly in recent years and it is on the brink of grid parity - in several countries, becoming accepted as a viable and credible energy source rather than just filling a niche. A year certainly is a long-time in this industry and I am sure it will be another interesting year ahead! Author: Ash Sharma Senior Research Director Photovoltaics, Power & Energy IMS Research www.imsresearch.com
