How the World’s Top Solar Countries Grew Their Markets
Solar electricity should reach 1 percent of global electricity demand for the first time ever in 2014, forecasts a new report by the International Energy Agency’s Photovoltaic Power System Programme (IEA PVPS).
This major milestone — though it sounds like a small percentage, it is a big deal for the solar industry — coincides with major changes in solar markets worldwide. Notable among them are a clear shift in demand from West to East in response to reduced government support across Europe and increased incentives in Asia, growing threats to distributed solar power on homes and commercial rooftops in the U.S. and solar electricity prices at or below parity with retail and wholesale grid prices in a number of markets.
The report, which includes preliminary data culled by experts and market participants in IEA and non-IEA countries, estimates that approximately 136 gigawatts (GW) of photovoltaic generating capacity was installed around the world entering 2014 — with the capability of generating an estimated 160 terawatt-hours of electricity — or about 0.85 percent of global electricity demand, according to IEA.
How did we get here? Countries have applied a number of policy and market-based strategies to encourage solar growth over the past decade, including tax credits, rebates and climate change levy exemptions — but far and away the most common are net metering and feed-in tariffs, two incentives that pay system owners for solar electricity sent to the grid.
To accompany the flood of data provided by the PVPS report and other sources, we’ve created an infographic that lists the world’s top solar countries, and also shows which tools they’ve used to reach these heights.
Praise for the 1-plus Percent Club
Although the global solar market is about to hit the record 1 percent mark this year, more than a dozen countries have surpassed that threshold already, according to IEA. A trio of nations – Italy, Germany and Greece – each rely on PV to supply more than 5 percent of their electricity today. Italy leads the way at an estimated 7.8 percent, followed by Germany at 6.2 percent and Greece at 5.8 percent. Bulgaria, Belgium, Czech Republic and Spain are between 3 and 4 percent.
In Europe as a whole, where premium payments for solar electricity fed into the grid (feed-in tariffs) have fueled a boom in PV rooftops and power plants over the past decade, approximately 3 percent of total electricity now comes from photovoltaic systems. At peak demand, Europe’s PV systems even cover up to 6 percent of the continent’s electricity consumption.
The only members of the 1-percent club outside of Europe are Australia, Israel and Japan, whose primarily residential and commercial rooftop markets have been supported by a combination of performance-based feed-in tariffs and net metering payments, and rebates.
Solar Eclipse in Europe
In terms of total installed capacity, Germany still leads by a wide margin with 35.5 GW of PV on the grid at the end of 2013 (see graphic below). Based on installed capacity per capita, Germany also remains way out front with 433.5 watts per person.
“This happened in a context of reduced feed-in tariffs, more constraining regulations for utility-scale PV and the political will to reduce the cost of renewables for electricity consumers,” noted the IEA PVPS report.
IHS predicts that the German market could fall again this year, installing less than 3 GW.
More intense has been the decline of the Italian PV market. After leading the world with 9.3 GW installed in 2011, Italy’s annually installed PV generating capacity dropped to 3.6 GW in 2012 and just 1.5 GW in 2013.
“A financial cap has now been set by the Italian authorities to limit the cost borne by electricity consumers,” explained the IEA PVPS report, adding, “Feed-in tariffs are not granted anymore for new PV installations but a self-consumption scheme and additional tax rebates are now in place.”
Due to its past primacy, however, Italy still is the world’s third-largest producer of PV power, with a total of 17.6 GW online entering this year. On a per-capita basis, Italy ranks No. 2 globally with 288.9 watts per person.
Despite a rise in installations in emerging European solar markets like the U.K., Greece and Romania – each of which installed more than 1 GW last year – Europe as a whole declined in 2013 to just over 10 GW. That compares to 17.6 GW of PV installed in 2012 and 22.4 GW in 2011, according to IEA data.
This year, IHS anticipates another year of decline in Europe to just 9.7 GW.
Meanwhile, China is on pace to continue its ambitious ascent. For the first time in 2013, China not only installed more solar power than Germany; the People’s Republic outshined all of Europe by installing 11.3 GW of PV – more than triple the year before – thanks to a potent combination of direct capital investments and feed-in tariffs.
That made China the largest PV market in the world in 2013. Based on a cumulative installed capacity of 18.3 GW, however, China still trails Germany overall.
IHS predicts that China will add another 13 GW this year, including 8 GW at ground-mounted power plants and nearly 5 GW on rooftops.
In a bit of a Fukushima effect, Japan was the No. 2 market for PV in 2013 with nearly 7 GW installed, according to the IEA PVPS report. That was up from just 1.7 GW of PV installed in 2012 and is the result of a new feed-in tariff program launched in mid-2012 in the wake of the catastrophic earthquake and tsunami that — at least temporarily — completely eliminated nuclear power in Japan.
With 13.6 GW of PV on the grid to start 2014 — mostly residential and commercial rooftop systems — Japan currently ranks fourth in the world.
Ash Sharma, senior director of solar research at IHS, expects Japan’s residential market to decline this year.
“Although the reduction in Japan’s feed-in-tariff conformed precisely to IHS expectations, other factors will cause the residential market to decline. These factors include the increase in sales tax on domestic PV systems, the expiration of the additional up-front subsidy and the slowdown in new housing construction,” according to Sharma.
The analyst, however, expects Japan’s commercial and power plant installations to fuel 45 percent growth in 2014 to around 9 GW.
Solar in the New World
The United States, the largest solar market in the Americas, installed 4.75 GW of PV in 2013 compared to 3.37 GW in 2012 — with much of the growth coming from ground-mounted power plants that qualify for a 30 percent investment tax credit.
Combined with lower technology costs, this tax credit has helped to push prices for utility-scale PV into the range of just 5 to 7 cents per kilowatt-hour. Such prices match or beat new sources of fossil fuel generation in many regions of the country and have garnered considerable attention from utilities.
Homeowners and business owners are also taking advantage of lower PV prices in the U.S., leveraging both tax credits and net metering. However, the latter policy has come under attack by utilities in key states such as Arizona, California and Colorado. The residential market in the U.S. nevertheless grew about 60 percent last year, adding nearly 800 megawatts (MW).
With a total of about 12 GW installed at the end of last year, the U.S. ranks at No. 5 in the world in terms of cumulative PV capacity, according to IEA. IHS sees the U.S. market as a whole adding another 6.4 GW this year.
Canada, the second largest PV market in the Americas, which is driven primarily by feed-in tariffs in the province of Ontario, added about 444 MW last year — pushing Canada past 1 GW of total installed PV generating capacity.
Latin American countries, on the other hand, “haven’t developed into a significant market yet,” according to the IEA PVPS report,” even though there has been an increase in development activities.
Despite this year’s 1 percent solar milestone, “PV hasn’t yet reached a widespread development,” finds the report. “On the contrary, the development of PV remains driven by a handful of countries,” it added.
IEA’s statistics show that Germany, China, Italy, Japan and the U.S. accounted for more than 70 percent of the world’s total installed PV generating capacity entering 2014.
In other words, a whole world of solar opportunity is still out there.
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Top photo, of the Mityaevo Solar Park in Crimea, CC-licensed by ActivSolar on Flickr. Featured photo, of the Long Island Solar Farm, CC-licensed by Brookhaven National Laboratory on Flickr.