Off the well-trodden path: Where are the hidden solar PV growth markets?

US renewable energy sources continued to grow in 2014, as reported by Breaking Energy, with data from the Federal Energy Regulatory Commission showing that “15,384 megawatts of new generation went into service in 2014, and 49.9 percent of [all that capacity] came from wind, solar and other renewables.” According to the International Renewable Energy Agency (IRENA), the US has the “potential to lead the global transition to renewable energy. It has some of the best wind, solar, geothermal, hydro, and biomass resources in the world.” Perhaps even more important in this context is that the US is deemed to also have “a vibrant culture of innovation, plentiful financing opportunities, and a highly skilled workforce, alongside an agile and entrepreneurial business sector.”

IRENA comes to this particular conclusion and more in one of the first country-specific reports in the ‘REmap 2030 series’ – the ‘REmap 2030 Analysis – A Renewable Energy Roadmap’ which offers an “assessment of how countries can work together to double the share of renewable energy in the global energy mix by 2030” from 18 per cent currently to 36 per cent in 2030. The new country-specific report is titled “Renewable Energy Prospects: United States of America” and this US-specific report builds on the global REmap report released in June 2014.

With regard to solar photovoltaics (PV) and concentrated solar power (CSP) in the US, the IRENA report paints an interesting picture of the current situation and looks ahead to 2030:

“Recent years have seen rapid drops in the price of solar PV technologies, as well as the launch of several landmark CSP plants [see Breaking Energy coverage here and here]. Solar resources in the US vary between regions, but across the whole lower 48 and Hawaii are higher than in Germany, the current world leader in solar PV capacity [see Breaking Energy Infographic here]. REmap 2030 envisages that by 2030 total installed capacity of solar PV could reach 135 GW, compared to 7 GW in 2012. This raises the prospect of a revolution in distributed generation, with over one-third of solar PV capacity installed on rooftops.”

Yet against this backdrop, Pete Danko of Breaking Energy analyzing the FERC data for 2014, noted that “utility-scale solar didn’t fare quite as well, with the FERC report showing 3,139 MW of new capacity coming online compared to the record-breaking 3,828 MW that was added in 2013.”

Nevertheless, there is a global trend unfolding with overall installed solar PV capacity continuing along a steadily rising trajectory. In this context, another recent research paper published by the European Becquerel Institute, whose mission it is to accelerate the “penetration of solar PV as a mainstream electricity source”, is especially noteworthy and helps identify promising future solar PV markets currently overlooked by virtue of being lumped together in charts and tables under the term ‘Rest of World’ (RoW).

This research paper entitled “Global Installed Photovoltaic Capacity and Identification of Hidden Growth Markets” gives an overview of installed solar PV for all countries in the world – with “PV installations (…) localized in 191 countries, representing 137,500 MW” – and provides analysis of both solar PV capacities and growth rates ranging from 2009 until the end of 2013.

Overview of Total Installed Solar PV Capacity per Country by End of 2013

Source: Becquerel Institute,“Global Installed Photovoltaic Capacity and Identification of Hidden Growth Markets” by Ch. Werner, A. Gerlach, Ch. Breyer, and G. Masson; Visit Appendix Table 1 in original paper for results for PV installation rates for all countries in the world at end of 2013; Above, Germany leads the solar PV pack of the 17 largest markets – defined as each having more than one GW of PV capacity by the end of 2013 and all in all 94% of global PV installations – with a share of 26% of total global installed PV or 35,680 MW. It is followed by China (18,310 MW), Italy (17,780 MW), Japan (13,500 MW), the US (12,200 MW), Spain (5,020 MW) et cetera. 

The authors of this paper – Ch. Werner, A. Gerlach, Ch. Breyer, and G. Masson – explain their motivation for conducting the research as follows:

“The global photovoltaic (PV) market is the fastest growing of all renewable energy markets. However, many successful countries, as measured by their renewable energy investments per gross domestic product, are typically not known. Public reports do not usually show any data for installed capacities in small PV markets. These markets are usually named as Rest of World (RoW). However, they often show a constant growth of installed PV capacity. Furthermore, in a significant number of those small markets, a rapidly rising growth rate is identifiable. With rising photovoltaic capacities and growing economies in these markets, they have a potential to become important photovoltaic markets in the future. Thus, RoW markets have to be better understood.”

Another salient point the authors make is that most solar “PV is installed in highly electrified countries as on-grid systems [with] reams of small off-grid systems in rural areas of developing countries” often neither adequately recorded nor included in statistics due to obvious data reliability issues with respect to installation rates.

Global Solar PV Market Development (End of 2013)

Source: Becquerel Institute,“Global Installed Photovoltaic Capacity and Identification of Hidden Growth Markets” by Ch. Werner, A. Gerlach, Ch. Breyer, and G. Masson; Please go to the original paper to enlarge and identify the respective countries.

Notes per the authors: “Cumulative installed PV by end of 2013 (x-axis) and PV capacities growth rate in 2013 (y-axis). Every bubble represents one country. The color code of the bubbles refers to the GDP/capita (left axis). The code inside of the bubble represents the internet-domain of the relevant country.”

The above growth-share matrix shows the segmentation of the global solar PV market based on the individual markets’ attractiveness (for details on portfolio analysis with the use of a logarithmic order, see entire paper here).

The paper’s main findings across the four quadrants, each representing one distinct solar PV market segment are as follows: The ‘cash cows’ quadrant – making up 57 per cent of total installed solar PV capacity – comprises “mature markets with (…) significant installed PV capacities (more than 0.1% of global installed PV at the end of 2013) with relatively low growth rates.” In spite of the latter, countries grouped together here – in total 15 – are the indispensable drivers of the global solar PV market and include, among others, Germany and Italy. The authors also point to the fact that ‘cash cows’ tend to be mostly countries with high incomes.

The next quadrant labeled ‘rising stars’ is regarded by the authors as “probably the most interesting market segment, as respective installed PV capacities (>0.1% of global PV in 2013) and growth rates are above the world’s long-term average (>52%) led to significant installations” in 2013. This solar PV market segment takes up 42 per cent of total global PV installations and, notably, is led by China, the US and Japan. Most importantly, the authors project with respect to countries and their solar PV markets in this quadrant that “[i]n the short- to mid-term, ‘rising stars’ will become ‘cash cows’, as such high growth rates will not be able to be kept with increasing cumulative PV capacities in the years to come.” One country that made the jump to the ‘cash cows’ group from 2012 to 2013 is Denmark (see Breaking Energy on Denmark and Renewables).

In the third quadrant – named ‘question marks’ – individual solar PV markets show high growth rates, but relatively low cumulative installed solar PV capacity – representing “only 0.85% of global PV installations” – and include markets on the cusp of becoming ‘rising stars’ such as Chile and Mexico. The paper stresses that only “if these markets [- marginal in terms of global solar PV -] keep their high growth rates for some years, becoming a ‘rising star’ can be a valid opportunity.”

Lastly, prima facie solar PV markets in the ‘dogs’ quadrant may appear “to be markets of less interest since only 0.7% of total PV is installed in those countries.” However, these are actually the hidden gems because “especially these are the sustainable, non-feed-in tariff driven markets which often claim a high share of PV off-grid applications” in countries such as “Tanzania, Kenya or Ethiopia”. The research paper charts the following path to ‘leaving the ‘dog’- quadrant’: Establish a high growth rate while at the same time increasing the cumulative installed capacity. Note, Brazil and Malaysia need to be considered outliers as they are about to transition directly to the ‘cash cows’ quadrant.

In early 2015, the global growth trend in solar PV remains intact and steady. On February 10, IHS announced that “quarterly solar photovoltaic (PV) module revenue (excluding processing service revenue) by the 20 leading global suppliers increased to $5.9 billion in the fourth quarter (Q4) of 2014. Compared to Q4 2013, quarterly module revenue (…) increased 12 percent, driven by strong growth of their total module shipment volume, which reached 8.8 gigawatts (GW) in the fourth quarter of 2014.

Full year 2014 module revenue by these suppliers also grew to $21.4 billion.” According to Ray Lian, principal analyst for IHS Technology, historic revenue heights are still to come and are projected to materialize as early as Q4 2015. “PV module revenues of the 20 leading suppliers will continue to grow, as they benefit from both robust global PV demand growth and increasing market share,” Mr. Lian added.

In this respect, the authors of the Becquerel commissioned research paper share another fundamental finding regarding the type of deployment of solar PV in emerging markets. They explain: “PV starts to develop in several emerging countries based on call for tenders for large-scale PV systems, rather than rooftop PV. This development will be even stronger in place where neither the population, nor the companies will have the ability to finance PV systems for self-consumption. This trend is already visible in 2013 with the share of large-scale PV increasing in all regions except in Europe.”

http://theenergycollective.com/roman-kilisek/2194606/well-trodden-path-where-are-hidden-solar-pv-growth-markets