Global Market Outlook For Solar Power / 2016 - 2020
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Caption to image. © SPE
FOREWORD: fROM THE PRESIDENT Welcome to the 2016 edition of the Global Market Outlook. We are glad to see that solar power is now increasingly being recognised by leading policy makers as a preferred technical solution to fight climate change, and also as a stable prized energy source. With the support of our quickly growing membership of European and international corporates and national associations, we have widened the scope and depth of this annual 5-year forecast for the global solar sector. Representing the solar industry in Europe, we strive to serve companies in their efforts to advance their solar business and to support policy makers in their work to establish the right framework conditions solar needs to fully tap its huge potential. A new solar era has started in 2015. The Climate Summit (COP 21) in Paris last December has brought together a grand global coalition that has finally agreed to act on halting global warming at 2°C, or if possible even 1.5°. Now it’s about turning words into action. The path is clear, the solutions well known and on-hand. It is about quickly and dramatically increasing the use of renewables and replacing polluting energies, and inflexible nuclear. The recent impressive cost reduction improvements have brought solar to a cost level that can compete increasingly with any other technology. It’s not new that solar is cheaper than retail power in some countries, but at today’s low cost, “socket parity” is quickly spreading also to places with modest sunshine and moderately high electricity prices. The important news is that solar now can generate power often even below conventional power plants. In the latest tenders unsubsidised solar power was offered at prices below low-cost on-shore wind power purchase agreements. The global solar market increased by over 25% to 50.6 GW in 2015. Emerging markets in Asia and America are now driving solar’s growth. The top 3 global markets in 2015 were China, Japan and the US - like 2014. China and Japan alone were responsible for over 50% of global PV capacity additions in 2015. China even took over the title from Germany as the country with the largest total installed solar power capacity. This Global Market Outlook foresees a much more positive solar development than our previous report. We anticipate total global installed solar capacity could grow to over 600 GW by 2020, that’s more than a 160% percent growth rate from 229 GW of commissioned PV systems at the end of 2015. Our High Scenario estimates even more than 700 GW by 2020. In Europe, we have just passed the impressive 100 GW mark of total solar installed capacity, earlier than any other region. Solar today supplies on average 4% to the EU’s power mix per year, in Italy it reaches nearly 8%, and in a number of German municipalities you have high two-digit shares of electricity demand covered by solar. Even today’s fastest growing solar markets have some way to go before they reach these solar penetration levels. That doesn’t mean Europeans can rest on their laurels. After the 2015 European solar market uptick, which followed several years of decline, it is highly probable that demand on the Continent is slowing again in 2016. In fact, several European member states are lagging behind in meeting their 2020 renewable targets. The Emission Trading System (ETS) has not been delivering, because it is not driving coal out of the European system - over one quarter of Europe’s power fleet is still based on inflexible, dirty coal technology. Europe urgently needs a plan to organise an orderly phase out from coal and could examine options such as an Emissions Performance Standard (EPS). The solar industry has been working hard in making solar cost-competitive, and continues in its efforts to further decrease cost. What we need now are market rules that are designed for variable renewable energy sources with zero marginal cost, which can be complemented with smart grids, storage, flexible power generation and demand side management tools. This is about creating a new market design that makes solar and wind the basis of the energy system and adds flexible technologies around them. Solar is ready today. That’s why SolarPower Europe has just called on the European Union’s leaders to increase its 27% renewable energy target by 2030 to 35%. If market frameworks are being set correctly, prosumers and utilities will strongly invest in the lowest-cost renewable energy technology, enabling an energy transformation that meets the ambitious COP 21 goals. Enjoy reading our new Global Market Outlook. for regular updates from SolarPower Europe, please follow us on Twitter: @SolarPowerEU Best wishes,
OLIVER SCHäfER PRESIDENT
MICHAEL SCHMELA EXECUTIVE ADVISOR
SolarPower Europe / GLOBAL MARkET OUTLOOk fOR SOLAR POWER 2016-2020 / 3
tablE OF cOntEntS
fOREWORD fROM THE PRESIDENT
3
EXECUTIVE SUMMARY
5 7 7
1
SOLAR POWER INDUSTRY & TECHNOLOGY TRENDS
2
GLOBAL SOLAR MARKET UPDATE 2000 - 2015 PROSPECTS 2016 - 2020 PROSPECTS 2016 - 2020 / SEGMENTS
13 13 17 23
3
THE EUROPEAN SOLAR MARKET 2000 - 2015 UPDATE 2000 - 2015 UPDATE / SEGMENTATION PROSPECTS 2016 - 2020
25 25 28 30
4
SOLAR IN THE EUROPEAN ELECTRICITY SYSTEM 2000 - 2015 UPDATE ASSESSMENT Of 2020-2030 ENERGY TARGETS TENDERS fOR SOLAR POWER
34 34 36 37
5
GLOBAL MARKET OUTLOOK FOR SOLAR POWER
38
Project manager & lead author: Michael Schmela, SolarPower Europe. Research and co-authors: Gaëtan Masson, Nhan Ngo Thi Mai, Becquerel Institute. External contributors: APERe, APREN, assoRinnovabili, BPVA, BSW Solar, Bridge to India, CANSIA, CZEPHO, EDORA, ENERPLAN, fronius, ANIE Rinnoabili, HELAPCO, Holland Solar, HUPIA, IEA-PVPS, JPEA, kOPIA, PV AUSTRIA, PV Russia, PV Poland, PV Vlaanderen, RPIA, SAPI, SASIA, SEDA, SEIA, SEMI Taiwan, SolarTrade Association, Swissolar, UNEf, WESM. Information outside Europe has been provided by PV MARkET ALLIANCE: AECEA (China), Becquerel Institute, CREARA (Latin America) and RTS Corporation (Asia). Publication coordination: Myrto Papoutsi, SolarPower Europe. Design: Onehemisphere, Sweden. Supported by: Intersolar Europe. Disclaimer: Please note that all historical figures provided in this brochure are valid at the time of publication and will be revised when new and proven figures are available. All forecast figures are based on SolarPower Europe knowledge at the time of publication. Please also note that forecast figures have been rounded. SolarPower Europe’s methodology includes only systems connected to the grid and not those that have been installed but not yet connected. The difference between installations and systems connected to the grid can be quite significant in some cases. Installed capacity considers all photovoltaic technologies.
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EXEcUtIVE SUMMaRY
2016 has had a positive start for the global solar power sector. In the first quarter, China alone installed over 7 GW; Europe passed the 100 GW mark of installed PV capacity; and the solar signals from many other parts of the world are very loud and clear as well. Solar continues to thrive. 2015 manifested solar as a true global power generation technology - with strong demand on all continents growing by 25.6% to 50.6 GW. Originally kick-started in Germany, then expanding across Europe, for the last 3 years, Asia has been the driving force for solar PV growth. While the top 3 global markets in 2015 were China, Japan and the US in the same order as the year before, China and Japan alone were responsible for over 50% of newly installed capacity. At the end of last year, China even took over the title from Germany as the country with the largest total installed solar power capacity, reaching 43 GW.
2015 marked a strong growth year for the European solar market. With 8.2 GW of newly grid-connected PV, the European PV market grew 15% year-on-year. This is the first upward trend since 2011, when annual grid connection peaked at 22.5 GW, following a growth period in the first decade of the century that was triggered by feed-in-tariff programs in Germany, Italy, Spain and a few other countries. After the 2015 European solar market uptick, which followed several years of decline, it is highly probable that demand on the Continent is slowing down again in 2016. Demand is forecasted to drop 11% - this is in line with last year’s report and is primarily due to the termination of the support for utility-scale solar in the Uk, which carried most of Europe’s 2015 growth on its shoulders. As of 2017, Europe is anticipated to return back to a growth path for the coming years. Several countries are expected to have progressed in the transition phase, from solar markets driven by traditional feed-in tariffs to self-consumption for residential and commercial PV, and tenders for industrial and utility-scale systems. Compared to last year’s Global Market Outlook 2015-2019, this report foresees a much more positive solar development for all 3 scenarios for the coming years. While the 2015 version assumed between 396 GW and 540 GW with the most likely scenario resulting in 450 GW of total gridconnected solar power by the end of 2019, the GMO 2016 foresees a range between 427 GW and 596 GW, and 516 GW for the most probable scenario. In 2020, total global solar capacity could be between 490 GW and 716 GW, with 613 GW considered the most likely scenario. In any case, 2 milestones will be reached in all scenarios – 300 GW solar power in 2017, and around 500 GW by 2020. The cost of utility-scale solar increasingly beats conventional power plants today, distributed solar is cheaper than retail electricity in many countries. The bidding price in a recent solar tender in Dubai was 2.99 US cents per kWh. While this reflects some specific national conditions, this solar bid outcompetes any known wind power purchase agreement so far and most fossil fuel plants as well. However, a simple cost comparison is not enough for solar to succeed in the long-run in electricity markets that were designed for centralized, dispatchable power generation. This is because the value of a unit produced by solar and its variable nature are not appropriately acknowledged. A stable regulatory environment taking into account the needs of renewable energy remains key to tap the gigantic potential of solar power. The report and all figures can be downloaded at www.solarpowereurope.org
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Caption to image. © SPE
SolarPower Summit
Co-organized with IBESA
26 October 2016 Munich, Germany
7-8 March 2017 Brussels, Belgium
• Market Insights, Drivers and Outlook
• 2017 global markets: what are the key drivers?
• Models and financing Approaches being Deployed in Europe
• The European experience: boosting solar markets
• Behind the Meter: focus on Consumers
• A rooftop revolution: power to the prosumer
• In front of the Meter: Utility storage
• The global evolution of solar: what is next?
• Long Term Perspectives and Complementary Technologies
www.solarpowersummit.org
• Is there a future for large-scale solar?
www.solarpower-storage.org
SolarPower Europe, the new EPIA (European Photovoltaic Industry Association), is a member-led association representing organisations active along the whole value chain. Our aim is to shape the regulatory environment and enhance business opportunities for solar power in Europe.
www.solarpowereurope.org
1 SOlaR POWER INDUSTRY & TECHNOLOGY TRENDS © Photo courtesy of Huawei
2016 has started positively for the global solar power sector. In the first quarter, China alone installed over 7 GW, which equals 14% of the 50.6 GW that was commissioned last year, Europe passed the 100 GW mark of installed PV capacity, and the solar signals from many other parts of the world are very loud and clear. Solar continues to thrive.
The Paris Climate Summit (COP21) in December 2015 was not only a landmark agreement in the fight against climate change, it also clearly recognized the crucial role solar will play in order to be able to transform the world’s energy system and keep global warming below 2 °C, and if possible even below 1.5 °C. The conference saw the launch of the International Solar Alliance, where more than 120 countries signed up to make solar a core energy source. Also on the occasion of COP21, the world’s largest regional and national solar associations united under the leadership of SolarPower Europe to speak with one voice, founding the Global Solar Council (GSC), which has its first headquarters in China, its secretariat in the US, and is currently chaired by Europe.
700 GW
of total global installed solar power is possible by 2020
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1 SOlaR POWER INDUSTRY & TECHNOLOGY TRENDS / CONTINUED
KEY InDUStRY & tEchnOlOGY tREnDS 2015/2016 a new investment cycle has started: As global demand for solar power grew last year by 25.6%, so have solar companies’ shipments all along the value chain. The world’s largest PV module company Trina Solar shipped over 5 GW for the first time in 2015, and IT equipment provider Huawei, for which solar is only a small business segment, became the world’s largest solar inverter producer. Many of the top PV companies were sold out and have continued to run at full capacities in the first months of 2016. After the last global financial crisis and the severe downturn in the solar industry, wafer and module makers hesitated for a long time to set up new production lines, but tried to expand through outsourcing or acquisition of smaller players. That changed last year, when a new investment cycle started – with orders for new solar production equipment reaching close to 1 billion USD in 2015. new factories outside china: With import taxes in a number of countries and regions limiting free trade of solar goods, the largest cell and module manufacturers from China have started to build their factories outside their home country. As further decreasing cost is key for solar’s success, the locations of the big PV cell and module makers’ new production facilities are in other Asian countries, such as Malaysia, Vietnam, Thailand – with India expected to profit from the next wave of investments. At the same time, Western processing material manufacturers are increasingly moving to, or are expanding in Asia to get closer to their customers. They face quickly growing competition from local production equipment and material suppliers. Global solar demand increases at substantial rates with the prospect of sustainable, longer-term growth, and there is usually domestic production jobs following such demand. There are many plans for local manufacturing facilities – primarily for commodities, such as solar modules - in emerging markets all around the world.
More than module manufacturing: The largest investment part for a solar PV power system is not the module, it is the balance of system technology (BOS), engineering, installation, and in particular financing. On top comes the need for operation and maintenance over the 25+ years lifetime of the solar system. These services are usually locally sourced – and more jobintensive than manufacturing. Still, a large part of the BOS equipment is produced locally as well. The value of the downstream business can be clearly seen in last year’s revenue ranking. The highest revenue in 2015 was generated by a western PV module producer - first Solar generated sales of 3.6 billion USD, although it produced much less modules than many Chinese solar module manufacturers, it had a much bigger project development and engineeringprocurement-construction (EPC) business. the cost for solar modules is coming down quicker than even most experts have anticipated – and this trend is continuing: The lowest reported in-house module production cost (incl. depreciation) in China was 37 US cents per W in Q1/2016. And Canadian Solar, for example, targets module cost as low as 29 US cents per W by Q4/2017, which means another 22% below today’s lowest cost level. This rapid development is strongly contradicted by the European Commission’s Minimum Import Tariff (MIP), which sets a minimum price for Chinese module imports to the European Union at 56 EUR cents, or around 50% above the lowest reported module cost today. Researchers have been working successfully on increasing cell and module efficiencies: from a technology point of view, crystalline silicon remains the workhorse of the solar module industry, being used for over 90% of PV installations. The latest trend in silicon solar cell technology is the quickly growing share of Passivated Emitter Rear Cells (PERC). This cell technology needs only a little more capital investment than production lines for standard cells and can be even used to upgrade current lines while promising an efficiency increase of up to 1% absolute.
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Thin film technology has seen steady improvements as well, beating several efficiency records over the last year. Both CIGS and CdTe recently exceeded the 22% efficiency level for laboratory size cells, while CdTe modules even reached 16.4% efficiency in mass production, a level comparable to standard multicrystalline silicon modules. Utilities going solar: It took a while, but a growing number of utilities are becoming very active in the solar power sector, both serving the distributed solar market as well as building and operating large-scale PV power plants. Those utilities that entered the solar business early, such as EDf Energies Nouvelles and Enel Green Power, are now recognized solar players on all continents. new players entering: Big retail groups, like IkEA, are expanding into sales of solar systems, while other large corporations, like Unilever, focus on procurement of solar power to supply their operations with green power. Prosumers & self-consumption of solar power is beginning to gain traction: In developed distributed solar markets, like many European countries, distributed power generation using solar combined with other smart solutions is starting to become the perfect way to control the personal energy bill. Community Solar, which are shared solar systems that are located on-site or off-site, is another concept to gain power independence.
2016 will be remembered in the renewable energy history books as the year solar became cheaper than on-shore wind power. for many years solar was considered as the main pillar for a future renewable energy based system. The milestones recently reached by the solar industry in its efforts to reduce power generation costs prove that solar power’s future is now. After several very competitive tenders last year resulted in many new record-low solar power supply prices, the most remarkable contract awarded was for a 100 MW tender in Dubai (UAE) in early 2015. A record-low 58.4 USD/MWh bid lead the Dubai Energy and Water Authority (DEWA) to double the original size of the project to 200 MW. In the meantime, several lower bids were awarded in different regions and countries, often without financial incentives. The 48 USD/MWh in Peru in early 2016 was another milestone, as well as the 36 USD/MWh in Mexico, but everything was beaten by the 29.9 USD/MWh price offered in the third round of the Dubai tender. While this lowest bid for the 800 MW project outshines everything seen in the solar and wind sector so far, even the competing bids in this DEWA tender came in at very low levels - from 36.5 to 45 USD/MWh. A good indication how quickly solar power prices have fallen can be seen in the offer from the consortium that won the earlier 200 MW Dubai tender at 58.4 USD/MWh, and which was bidding in the latest tender at 39.5 USD/MWh – that’s a 30% price decrease within one and a half years.
Battery storage is quickly evolving into a standard product that is offered in combination with new solar systems, offering an attractive tool for prosumers and a solution in front of the meter for ancillary services and other benefits to grid operators.
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1 SOlaR POWER INDUSTRY & TECHNOLOGY TRENDS / CONTINUED
FIGURE 1 PPA PRICE OFFERS FOR SOLAR PV AND WIND ONSHORE POWER PLANTS IN DIFFERENT COUNTRIES
140
120 Jordan
India India
Germany
100 Chile
South Africa
Germany
Brazil
Uruguay USD/MWh
India France
80
Germany
Jordan South Africa India
South Africa Brazil
Canada
60
Australia
Jordan
Brazil
Brazil
UAE South Africa
Brazil
Chile Peru
Brazil
Peru Egypt Morocco
USA
40
USA
Mexico UAE
20
Solar Wind onshore
0
2012
2014
2015
2016
Year Source: International Energy Agency 2016
The recent solar price developments show the rapidly improving cost-competitiveness of solar power generation, which can generate electricity at price levels that are now frequently even below new conventional power plants, in particular in regions with low financing cost (see Fig. 2).
© SOlaRPOWER EUROPE 2016
PV is increasingly cost competitive with fossil fuels and even onshore wind power
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FIGURE 2 SOLAR ELECTRCITY GENERATION COST IN COMPARISON WITH OTHER POWER SOURCES
400
350
LCOE (USD/MWh)
300
250
200
150
100
50
3%
7%
N uc le ar
T
C oa l
C G C
Re si de nt ia C lP om V m er ci al U til PV ity -s ca le PV
C oa l N uc le ar
T C G C
si de nt ia lP om V m er ci al U til PV ity -s ca le PV C
Re
C oa l N uc le ar
T C G C
Re si de nt ia C lP om V m er ci al U til PV ity -s ca le PV
0
10%
MEDIAN Source: International Energy Agency 2015
© SOlaRPOWER EUROPE 2016
cost of financing is the key decision criteria for investments in utility-scale solar The record-low solar power price bids in recent tenders have reasons beyond technology improvements and high solar irradiation in the locations of the planned power plants. When looking at the cost of a solar power plant, modules and balance of system (BOS) cover roughly 50%. On top come costs for operation and maintenance (O&M) service contract and insurances. But the single largest contributor to a solar power plant is the cost of financing at about one third of the total. The cost of financing is heavily depending on two items – operational risk and regulatory risk. When using certified and high-quality low-cost products combined with appropriate service contracts and insurances to cover warranties, the operational risk can be very well controlled. Solar power is a proven technology with many systems in the field working without flaws for over 20 years. The regulatory risk is a factor that is much harder to assess, as it involves politics. In Dubai’s stable political and economical environment, and with state energy agency DEWA being the organizer of the tender and the off-taker of the power, many developers evidently assessed a very low regulatory risk.
While the cost of utility-scale solar increasingly beats conventional power plants, distributed solar is cheaper than retail electricity in many countries. However, a simple cost comparison is not enough for solar to succeed in the long-run in electricity markets that were designed for centralized, dispatchable power generation. The value of a unit of energy produced by solar and its variable nature are not appropriately acknowledged. In liberalized markets, technologies with zero marginal cost, like solar, drive power prices down to levels that are still below today’s generation cost. In the distributed segment, inappropriate regulation, as well as taxes for self-consumption, make it difficult for solar to take advantage of its low cost. Intelligent new electricity market designs are key for solar power to be able to contribute large shares into the power mix. In the meantime, solar continues to rely on different incentive mechanisms that drive demand. This includes technology-specific renewable portfolio standards (RPS) and tenders, tax credits, traditional feed-in tariffs or Power Purchase Agreements (PPAs), as well as premiums for the feed-in of excess power generated in self-consumption systems. In 2015, one third of solar power demand was driven by schemes other than traditional uncapped feed-in tariffs (see fig. 3).
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1 SOlaR POWER INDUSTRY & TECHNOLOGY TRENDS / CONTINUED
FIGURE 3 MAIN POLICY DRIVERS FOR SOLAR PV IN 2015
PPAs 8.3%
Self-consumption / Net-metering 15.0%
Feed-in Tariffs 63.2%
Direct subsidies / Tax breaks 11.5%
Green certificates / RPS-based schemes 2.0%
Source: Data from IEA-PVPS.
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© SOlaRPOWER EUROPE 2016
2 GlObal SOlaR MaRKEt UPDATE 2000 - 2015 © Alessandro Cosmelli, Photo courtesy of Enel Green Power
2015 concluded a 3-year trend, manifesting solar as a real global power generation technology - with strong demand on all continents. Originally kick-started in Germany, then expanding across Europe, and as of 2013, Asia has been the driving force for solar PV growth. At the end of last year, China took over the title from Germany as the country with the largest total installed solar power capacity.
50.6 GW have been installed and commissioned in 2015, which is a bit higher than the preliminary numbers (50.1 GW) published in our Market Report 2015 in March – and in line with the forecast of the GMO 2015. This means, solar demand grew 25.6% over the 40.3 GW commissioned in 2014. the countries driving the bulk of the world’s solar growth in 2015 remained the same group as the year before: The strong solar commitment of the Chinese government pushed the country’s PV market up by 46% to 15.15 GW in 2015, from 10.6 GW the prior year, contributing 30% of total global demand alone. While the government’s target originally was nearly 18 GW, the final results can be partially explained by slower than expected development of the distributed market and transmission grid constraints. Japan ranked second in 2015 again. Supported through the most attractive invectives, the Japanese market grew 13%, to an all-time high of 11 GW (and thus even higher than we first estimated in our recent Market Report), making it the only other market in the 2-digit GW range. Driven by feed-in tariffs and utility-scale power plants, both China and Japan together were responsible for more than half of all new solar grid-connections in 2015. The US market maintained its third rank, but grew its grid-connected capacity below average global growth rates – by 18% to 7.3 GW, from 6.2 GW in 2014. The main driver in the US are state renewable portfolio standards and a 30% Investment Tax Credit (ITC), which have incentivised half of the new installations being utility-scale power plants. While the other incentive tool, net-metering, is increasingly being challenged by utilities and regulators, demand for residential solar jumped by nearly 70% to over 2 GW. Europe as a whole saw a first slight uptick in 2015 since 2011, adding 8.2 GW to the grid, a 15% growth after three consecutive years of declining demand. Three European countries still belong to the global top 10 in 2015 - the United kingdom (4th), Germany (6th), and france (9th).
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2 GlObal SOlaR MaRKEt UPDATE 2000 - 2015 / CONTINUED
for the first time, India belonged to the top 5 solar markets in the world. It augmented its total solar power target to 100 GW by 2022, and created the International Solar Alliance, a group of around 140 countries that target universal access to clean energy. The 2 GW of new PV capacity added in 2015 – mainly utility-scale systems awarded through tenders, is just the start of the Indian solar boom. A number of markets, remained more or less stable in 2015, showing no or only little growth, but contributed still close to 1 GW – in Europe, this included france, which went down slightly to 879 MW. In Asia, korea increased newly added solar power capacities by 12% to 1 GW, and in the pacific rim, Australia again added around 900 MW. Australia has been traditionally a feedin tariff market. Now that the residential market shows the first signs of saturation, this segment has transformed to self-consumption and starts to embrace battery storage, while the general market is opening up toward commercial and industrial applications.
Several other countries contributed significantly, such as Canada, adding 600 MW, Taiwan installing 400 MW, and Chile connecting close to 450 MW. While the African on-grid market has traditionally been dominated by South Africa, which added only around 200 MW in 2015, utility-scale solar power is now starting to get traction in other African countries . Algeria added 268 MW, and Egypt installed a few utility scale PV plants, after announcing an ambitious program targeting 2.3 GW by 2017. The key takeaway for solar from 2015: After COP 21 and the quickly spreading news about solar power’s increasingly competitive low cost levels, photovoltaic technology has become a truly global solution for generating power, quickly enticing newcomers to implement this power generation technology all around the world.
FIGURE 4 EVOLUTION OF GLOBAL ANNUAL SOLAR PV INSTALLED CAPACITY 2000-2015
60
50.6 50
GW
40
30
20
10
0 2000
2001
2002
EUROPE
2003
2004
AMERICA
2005
2006
2007
CHINA
*APAC excl. China
14 / SolarPower Europe / GLOBAL MARkET OUTLOOk fOR SOLAR POWER 2016-2020
2008
2009
2010
APAC*
2011
2012
MEA
2013
2014
2015
RoW
© SOlaRPOWER EUROPE 2016
The cumulative installed solar PV power capacity increased 29% year-on-year to 229 GW by the end of 2015. In only 5 years, from 2010 to 2015, the total global PV capacity jumped over 450% from less than 41 GW. Looking back 10 years, solar’s development has been even more impressive - from 5 GW of total commissioned PV capacity at the end of 2005 the market has grown 45 times in just one decade.
2015 was the year Asia fully caught up with European solar pioneers. Out of the 229 GW installed and commissioned at the end of 2015, Europe still accounted for the major global share at 97 GW, but the Asia-Pacific (APAC) countries had almost reached the same level at 96 GW. America (including both North and South America) still lags behind at 31 GW. Middle East/Africa (MEA) had only 3 GW of PV end of 2015.
Since 2000, when the modern solar success story basically began with the implementation of Germany’s feed-in tariff program, installed global solar power capacity has even multiplied by a factor of more than 150.
FIGURE 5 EVOLUTION OF GLOBAL TOTAL SOLAR PV INSTALLED CAPACITY 2000-2015
250
229.3
200
GW
150
100
50
0 2000
2001
2002
EUROPE
*APAC excl. China
2003
2004
AMERICA
2005
2006
2007
CHINA
2008
2009
2010
APAC*
2011
2012
MEA
2013
2014
2015
RoW
© SOlaRPOWER EUROPE 2016
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2 GlObal SOlaR MaRKEt UPDATE 2000 - 2015 / CONTINUED
for the first time in a decade, Germany is no longer the country with the largest cumulative solar capacity: In addition to installing the largest solar volumes per year, China has now also taken the lead regarding total solar power capacities - reaching 43.5 GW, equal to 19% of the global market share at the end of 2015. Germany, now ranked second, has yet to reach the 40 GW mark. Japan scored third place with 34.3 GW connected to the grid, ahead of the USA with 25.6 GW
and Italy with 18.6 GW. Besides these 5 countries, no other national market touched the 10 GW level by the end of 2015. In the first quarter of 2016, the Uk, which had 9.1 GW installed by end of 2015, exceeded 10 GW as well. While India (5.1 GW) could be the next to reach the 10 GW level, potentially already this year, it will take a few more years for others to get there. At the end of 2015, france had a total solar capacity of 6.5 GW, Spain was at a level of 5.4 GW and Australia at 5.1 GW.
FIGURE 6 EVOLUTION OF GLOBAL REGIONS' TOTAL PV INSTALLATIONS 2010 - 2015
100 90 80 70
%
60 50 40 30 20 10 0 2010
EUROPE
2011
2012
AMERICA
2013
APAC
2014
MEA
2015
RoW © SOlaRPOWER EUROPE 2016
FIGURE 7 GLOBAL TOP 10 SOLAR PV MARKETS TOTAL INSTALLED SHARES BY END OF 2015
Rest of World 15.8% China 18.9% India 2.2% Australia 2.2% Spain 2.4% France 2.8%
Germany 17.3%
United Kingdom 4.0%
Italy 8.1%
USA 11.3%
Japan 15.0%
© SOlaRPOWER EUROPE 2016
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2 GlObal SOlaR MaRKEt PROSPECTS 2016 - 2020
After the 50 GW annual level of newly added solar power capacity was reached in 2015, the global solar market is well on its way to crack the 60 GW mark in 2016. In our Medium Scenario, estimating around 62 GW for 2016, there would be 22% year-on-year growth. While the Low Scenario predicts that less new solar power will be added in 2016 than in 2015, it is very unlikely to happen given the installations so far in the first quarter of the year. It is still possible that the actual curve will move more towards the High Scenario, assuming 77 GW for 2016. After all, 2016 global solar market growth will largely depend on China, which installed an impressive 7.1 GW only in the first quarter of 2016 (compared to 5.1 GW in Q1/2015) and has continued strongly during the start of the second quarter as well.
It is also not yet clear how much solar Japan, solar’s other stronghold, will install in 2016. Although the feedin tariffs for utility-scale solar were decreased in April, at 24 JPY the tariff level is still very attractive compared to most other solar markets. With the Japanese government planning to replace its feed-in tariff system through tenders, developers might rush to install as much PV power plants as soon as possible. The other wild card is the US – after the ITC did not end as planned in 2016 but was surprisingly extended in December 2015, it remains to be seen if developers push to complete late-stage projects this year or take their time. Then there is India, which aims to install 12 GW in its fiscal year 2016 (ending in March 2017). This seems very ambitious. While India is quickly creating the infrastructure needed to realise its gigantic solar plans, the Medium Scenario forecasts that between 5 and 6 GW will be added in the calendar year 2016.
SolarPower Europe / GLOBAL MARkET OUTLOOk fOR SOLAR POWER 2016-2020 / 17
2 GlObal SOlaR MaRKEt PROSPECTS 2016 - 2020 / CONTINUED
FIGURE 8 GLOBAL ANNUAL SOLAR PV MARKET SCENARIOS UNTIL 2020 140
120.2 120
100
15% 14%
76.7
80 GW
10% 8%
62.6
22%
60
50.6
47.1
40
20
0 2010
2011
Historical data
2012
2013
2014
Low Scenario
2015
2016
2017
High Scenario
2018
2019
2020
Medium Scenario © SOlaRPOWER EUROPE 2016
for next year, 2017, a somewhat more moderate growth rate is anticipated in the Medium Scenario, following the end of the attractive incentive program of the Uk, Europe’s leading market in 2014, 2015 and most likely 2016, and Japan’s potential move to tenders. Added to this is the assumption that China controls growth, as long as the lack of transmission lines from the locations with high solar power plant densities requires frequent curtailment, and plans for much larger shares of distributed solar generation materialize. In the period 2018 to 2020, further cost improvements, new markets, customers better understanding solar’s value, and new market players are very likely to lead again to higher annual growth rates. The most probable scenario (Medium Scenario) assumes that annual demand grows up to 97 GW in 2020. The surprising rapid cost reduction in recent solar tenders, might even trigger much higher demand for PV. There is also upside potential for distributed solar in combination with battery storage. The High Scenario estimates a strongly growing annual market, reaching 120 GW in 2020.
The key to sustainable growth of solar power is a stable policy environment. If only a few major markets take the wrong policy decisions - such as failing to adapt their electricity market design to the needs of renewables, adding unjustified high taxes or import barriers, cutting incentives too rapidly or changing framework conditions retroactively - dramatic disruptions can occur, which has happened in several European countries. Taking these risks into account, the Low Scenario assumes a development that results in 63 GW of market demand in 2020. The Low Scenario is very unlikely from today’s perspective, but should not be completely discarded. Compared to the Global Market Outlook 2015, this report foresees a much more positive solar development for all 3 scenarios for the coming years. While the 2015 version assumed between 396 GW and 540 GW with the most likely scenario resulting in 450 GW of total operating solar power by 2019, the GMO 2016 forecasts a range between 427 and 596 GW and 516 GW for the most probable Medium Scenario. In 2020, total solar capacity could be between 490 and 716 GW, with 613 GW considered the most likely scenario. In any case, 2 milestones will be reached in all scenarios – 300 GW solar power in 2017, and around 500 GW by 2020.
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FIGURE 9 GLOBAL TOTAL SOLAR PV MARKET SCENARIOS UNTIL 2020 800
716.1 700 19%
600 20%
GW
500
489.8
21%
400 23%
306.1 300
27%
276.5
200
229.3
100
0 2010
2011
Historical data
2012
2013
2014
Low Scenario
2015
2016
2017
High Scenario
2018
2019
2020
Medium Scenario © SOlaRPOWER EUROPE 2016
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2 GlObal SOlaR MaRKEt PROSPECTS 2016 - 2020 / CONTINUED
Whichever path the development of solar will take in the next 5 years between the two boundaries of the low and high scenarios, there is little doubt that Asia’s market dominance will prevail. While its market share exceeding 60% today - will slightly decrease as the Americas and Middle East/Africa gain traction, in any case Asia should absorb over half of the new PV installations in 2020.
100 GW
Europe reaches mark of installed PV in early 2016
FIGURE 10 EVOLUTION OF GLOBAL ANNUAL SOLAR PV MARKET SHARES FOR HIGH AND LOW SCENARIOS UNTIL 2020
140
120
100
GW
80
60
40
20
0 Historical
High
2015
Low
High
2016
Low
High
2017
EUROPE
Low
High
2018
AMERICA
Low
High
2019
APAC
Low
2020
MEA
RoW
2015
2016
2016
2017
2017
2018
2018
2019
2019
2020
Historical
High
Low
High
Low
High
Low
High
Low
High
Low
EUROPE
16.2
13.2
11.8
13.8
12.4
15.1
12.8
15.8
12.6
16.8
12.7
AMERICA
18.2
25.8
23.4
21.4
23.1
21.9
24.3
22.2
26.4
21.9
26.9
APAC
62.0
56.8
61.9
58.2
58.6
56.0
56.4
54.2
54.4
52.7
53.8
MEA
1.6
4.2
3.0
6.5
5.9
7.0
6.4
7.8
6.6
8.7
6.6
RoW
2.0
0
0
0
0
0
0
0
0
0
0
%
2020
© SOlaRPOWER EUROPE 2016
20 / SolarPower Europe / GLOBAL MARkET OUTLOOk fOR SOLAR POWER 2016-2020
The use of solar power will spread to many quickly emerging markets on all continents over the next 5 years. The Top 20 markets would each absorb more than 2 GW by 2020 even in the Low Scenario and at least 4 GW in the High Scenario. But the bulk of the growth will be still carried out by a few markets. While 8
countries might add each over 10 GW if the policy environment is working optimally, only 4 markets – China, US, Indian and Japan - are supposed to add over 20 GW in any scenario, with China being the only country that could even exceed the 100 GW level in the High Scenario.
FIGURE 11 TOP 20 MARKETS' SOLAR PV ADDITIONS FOR HIGH AND LOW SCENARIOS 2016 - 2020
105.0
China
60.0 69.0
USA
47.0 66.0
India
35.0 34.2
Japan
22.6 12.5
Turkey
3.3 10.8
Germany
6.3 12.0
Mexico
5.7 11.0
Pakistan
4.8 9.5
Brazil
4.6 8.4 6.3
Australia
8.2
United Kingdom
3.4 7.8 5.0
Korea
7.3
France
4.7 6.8
Egypt
3.5 5.5
Philippines
High Scenario
2.1
Italy
5.1 2.4
Netherlands
4.8 2.5
Low Scenario
4.7
Austria
2.1
Canada
4.4 3.0
Thailand
4.0 2.2
0
20
40
60
80
100
120
GW © SOlaRPOWER EUROPE 2016
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2 GlObal SOlaR MaRKEt PROSPECTS 2016 - 2020 / CONTINUED
The forecast is mostly sunny for the largest nonEuropean global solar markets in the next 5 years. The average growth rates for each of these top 20 markets will be in the 2-digit range between 2016 and 2020 in the most probable scenario, with a few emerging markets (Brazil, Mexico, United Arab Emirates) expected to grow over 100%. Japan is the only non-European top solar market that is considered to show negative
developments in the coming year. While the Asian island nation is anticipated to add nearly 30 GW solar power in the next 5 years – that is more than almost all other countries except China (around 87 GW), the US (nearly 60 GW) and India (>50 GW), the Japanese government is preparing to limit and control growth, moving from uncapped feed-in tariffs to a tender-based system for large systems already as soon as the next fiscal year.
FIGURE 12 TOP GLOBAL SOLAR PV MARKETS’ PROSPECTS* 2015 Total Capacity (MW)
2020 Total Capacity Medium Scenario by 2020 (MW)
2016 - 2020 New Capacity (MW)
2016 - 2020 Compound Annual Growth Rate (%)
China
43,381
130,381
87,000
25%
USA
25,910
85,310
59,400
27%
India
5,048
57,398
52,350
63%
Japan
34,347
63,347
29,000
13%
Pakistan
610
9,985
9,375
75%
Mexico
205
9,080
8,875
114%
5,093
12,248
7,155
19%
Brazil
69
6,509
6,440
149%
Korea
3,421
9,821
6,400
23%
Egypt
16
4,859
4,843
214%
Philippines
156
3,956
3,800
91%
2,371
6,056
3,685
21%
854
4,509
3,655
39%
1,444
4,654
3,210
26%
Algeria
268
3,053
2,785
63%
Taiwan
1,176
3,726
2,550
26%
South Africa
1,122
3,457
2,335
25%
Saudi Arabia
100
2,285
2,185
87%
UAE
24
1,786
1,763
138%
Israel
870
2,220
1,350
21%
Australia
Canada Chile Thailand
*Top global markets does not include European countries. For top European markets, see Fig. 19.
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Political support prospects
2 GlObal SOlaR MaRKEt PROSPECTS 2016 – 2020 / SEGMENTS
Utility-scale PV systems clearly dominated the global solar market in 2015, adding 32.6 GW, which represents nearly a 2/3 share of newly added installations. A year earlier, in 2014, utility-scale PV and distributed solar had nearly equal shares, at 21 GW and 19 GW, respectively. In the early days of on-grid solar, distributed installations were mainly responsible for the sector’s growth. But feed-in tariff policies, tax incentives and renewable portfolio standards have been attracting investors to put their money into lucrative and lower-cost large-scale PV power plants. With demand growth coming mainly from emerging markets where utility-scale PV is currently the preferred application, this solar segment will continue its lead over the next 5 years. Policy leaders often prefer to see distributed solar on rooftops, where it outcompetes any other renewable energy technology and – unlike ground-mounted PV power plants, does not compete with other usages. This has been in particular the case for European countries, where ground-mounted PV systems sometimes even have been limited in size - in Germany, for example, up to 10 MW, and also in volume by implementing tenders. However, even in today’s fully centralized solar markets, China and India, the governments are striving to develop the distributed segment, though with limited success so far. The simplicity of utility-scale PV contrasts with the complexities to set up a sustainable distributed PV on-
grid market, which takes a considerable amount of time to educate customers, while establishing a functioning administration and the right financing instruments, solve ownership questions, and put standards in place. Even several developed distributed rooftop solar markets are struggling as they are transforming from feed-in tariff or net-metering markets to selfconsumption schemes. This is despite the fact that solar in many instances is cheaper than retail electricity. The barriers that have been implemented for rooftop solar in certain European countries (taxes on self-consumed solar power, hindering sales of excess power or only offering wholesale prices) and continued discussion on further limitations have kept many potential buyers away from investing in their own solar system. In 2015, the global solar rooftop segment even declined by 1 GW year-on-year, which is in line with the previous report’s forecast for the Low Scenario, while utility-scale solar almost met the High Scenario. The new forecast has hardly changed for the rooftop PV market, only slightly increasing the High Scenario in response to various countries’ announcements to develop rooftop PV. Regarding utility-scale, the High Scenario was increased considerably up to 67.3 GW, following announcements to boost solar in several emerging markets and the quicker than anticipated improvements for solar power generation cost.
FIGURE 13 SCENARIOS FOR GLOBAL SOLAR PV ROOFTOP AND UTILITY SCALE SEGMENTS DEVELOPMENT 2015-2020
Rooftop solar
80
Utility-scale solar
80
70
67.3
70
60
60
52.8 50 GW
GW
50
40
26.6
30
20
36.0
40
32.6 30
18.0
20
10
10
0
0 2015
2016
2017
2018
Historical data
2019
2020
2015
Low Scenario
2016
2017
2018
2019
2020
High Scenario © SOlaRPOWER EUROPE 2016
SolarPower Europe / GLOBAL MARkET OUTLOOk fOR SOLAR POWER 2016-2020 / 23
1 IntRODUctIOn / CONTINUED
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3 thE EUROPEan SOlaR MaRKEt 2000 – 2015 UPDATE © Solal Building | Dijon (F) | Project by ISSOL sa/nv for GDF-Suez
2015 marked a strong growth year for the European solar market. With 8.2 GW of newly gridconnected PV, the European PV market grew 15% year-on-year. This is the first upward trend since 2011, when annual grid connection peaked at 22.5 GW, following a growth period in the first decade of the century that was triggered by feed-in-tariff programs in Germany, Italy, Spain and a few other countries.
On the heels of the boom cycle and its unsustainable peak, a strong market consolidation followed, with European countries progressively transitioning from traditional feed-in tariff driven solar investments to more market-driven solar installations. Between 2011 and 2014, volumes of new PV grid-connections in Europe declined each year, reaching a 5-year low, at 7.1 GW, in 2014. The Uk took the No. 1 spot in Europe again, adding 3.7 GW of new solar power capacity in 2015. Germany stayed on rank 2, grid-connecting less than 1.5 GW, significantly missing the official annual target range of 2.4 to 2.5 GW. The long-time European solar leader’s market was negatively impacted by a new pilot tender scheme for systems above 1 MW as well as continued problems to attract large numbers of investors with its self-consumption scheme. france remained the third largest European market, installing less than 0.9 GW in 2015, driven by tenders granted in the past and a slightly growing distributed market. france also commissioned the largest PV power plant in Europe last year, a 300 MW utility-scale system. Except for the Uk and Germany, each of the other European markets added less than 1 GW solar power in 2015. Italy, once a European leader, continues its transition mode, and installed around 300 MW. Spain, a world market leader in 2008, has completely disappeared from the European PV map for many years. After stopping its feed-in-tariff scheme, the Spanish Government not only implemented retroactive changes, it also hindered the emerging self-consumption market with a solar tax and high fines for non-declared prosumers. While it is good news that Spain more than doubled installations to 56 MW in 2015 from 22 MW in 2014, this is way below the country’s potential.
15%
Solar power could cover of electricity demand in Europe in 2030
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3 thE EUROPEan SOlaR MaRKEt 2000 – 2015 UPDATE / CONTINUED
The fate of solar in Spain is similar in several other former high feed-in-tariff markets: Belgium, Bulgaria, Czech Republic and Greece. The solar markets in Slovakia and Slovenia have almost completely come to a halt; the same is true for Ukraine, though for a different reason. There is a group of European countries that can be considered small in absolute numbers, but that are showing more or less stable demand. This includes Austria, which grid-connected more than 150 MW in 2015, a level that is a little less than the 159 MW added the year before, and Switzerland, where additions stabilized around 300 MW. Beyond the Uk, 8 other European countries added more PV capacity in 2015 than the year before. This includes the Netherlands, Turkey, Denmark, Romania, Hungary, Sweden, Poland and Spain. The strong 50% growth in the Netherlands to an estimated 450 MW in 2015, from 302 MW in 2014, was mainly driven by the country’s net metering scheme. Denmark’s new additions, which even grew four times to 183 MW in 2015, were also mainly triggered by net metering and utility-scale plants.
Poland installed for the first time around 50 MW, to a large extent financed using EU funds, while Hungary reached a comparable level with a much smaller population. Sweden also added around 50 MW based on self-consumption, tax benefits and other incentives. Turkey added 208 MW compared to 40.2 MW the year before, but expectations were much higher. The existing GW-pipeline could only be partially tapped due to complex regulation. Compared to the Market Report 2015, published earlier this year with first estimates for the market development in 2015, some numbers have changed, increasing new solar PV grid-connections in 2015 to 8.2 GW in Europe. The European Union alone has reached 7.7 GW of newly connected PV installations.
FIGURE 14 EVOLUTION OF EUROPEAN ANNUAL SOLAR PV INSTALLED CAPACITY 2000 - 2015 FOR SELECTED COUNTRIES 25
20
GW
15
10
8.2
5
0 2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Austria
Belgium
Bulgaria
Czech Rep.
Denmark
France
Germany
Greece
Italy
Netherlands
Romania
Spain
UK
Rest of Europe
© SOlaRPOWER EUROPE 2016
26 / SolarPower Europe / GLOBAL MARkET OUTLOOk fOR SOLAR POWER 2016-2020
The solar sector in Europe is still in a transition phase. The 15% market growth in Europe in 2015 should not distract from the big solar picture on the European Continent: Without the enormous growth in the Uk, the European solar market would have remained in 2015 roughly at the 2014 level.
Despite the transition struggle of several of the advanced European solar markets, total installed capacities grew from 88.9 GW in 2014 to 97.1 GW by the end of 2015, which means Europe maintained its title as the world’s largest solar continent in 2015, though only about 1 GW ahead of the Asia/Pacific region.
FIGURE 15 EVOLUTION OF EUROPEAN TOTAL SOLAR PV INSTALLED CAPACITY 2000 - 2015 FOR SELECTED COUNTRIES 120
97.1
100
GW
80
60
40
20
0 2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Austria
Belgium
Bulgaria
Czech Rep.
Denmark
France
Germany
Greece
Italy
Netherlands
Romania
Spain
UK
Rest of Europe
© SOlaRPOWER EUROPE 2016
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3 thE EUROPEan SOlaR MaRKEt 2000 - 2015 UPDATE / SEGMENTATION
A European latecomer, the Uk’s recent solar boom was also primarily triggered by incentives for utility-scale systems, which ended in March 2016. The Uk also has a separate feed-in-tariff program for small PV systems, which was cut as well. In smaller, more densely populated European countries, such as Belgium, the Netherlands, or Austria, policy makers have usually preferred rooftop solar.
The European PV markets remain driven by policy issues. The European Union has as many different solar policy environments as its number of countries. Depending on the preference of policy makers and regulators, some countries have more utility-scale PV installed while others own a bigger share for industrial, commercial or residential rooftops. As a rule of thumb, the less active a once strongly thriving market is in Europe, the larger is the share of cumulative installed utility-scale solar. following its short-lived solar boom periods based on utility-scale plants, which ended after the financial incentives programs were terminated, countries like Romania, Bulgaria or Spain have hardly added any noteworthy solar capacities.
There are also markets in Europe, which have supported all segments, though with different emphasis over time. In Germany’s flourishing solar days until 2012, growth was mainly carried by commercial systems, and to a lesser extent utility-scale and industrial segments. After moving to self-consumption with feed-in premium, the market has been based mainly on residential rooftop systems, while a new tender scheme for ground-mounted installations above 1 MW is starting to contribute to demand.
FIGURE 16 EUROPEAN SOLAR PV TOTAL CAPACITY UNTIL 2015 FOR SELECTED COUNTRIES
100 90 80 70
%
60 50 40 30 20 10
Residential
Commercial
Sl ov ak ia
Be lg iu m
itz er la nd
la nd
Industrial
Sw
Po
N et he rla nd s
Au st ria
Ita ly
De nm ar k
re ec e G
er m
an y
ce G
Fr an
ga l Re pu bl ic
rtu Po
C ze ch
do m Ki ng
U ni
te d
Sp ai n
ar ia Bu lg
Ro m
an ia
0
Utility scale
© SOlaRPOWER EUROPE 2016
RESIDENTIAL: systems below or equal to 10 kWp COMMERCIAL: systems with a capacity between 10 and 250 kWp INDUSTRIAL: systems with a capacity above 250 kWp UTILITY SCALE: systems with a capacity above 1000 kWp and built on the ground
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3 thE EUROPEan SOlaR MaRKEt PROSPECTS 2016 - 2020
Scenario expects an annual low 2-digit growth in the coming years with annual installations growing up to 15 GW per year in 2020.
After the 2015 European solar market uptick that followed several years of decline, it is highly probable that demand is slowing down again in 2016. This forecasted 11% demand drop to 7.3 GW is in line with last year’s report and is primarily due to the termination of the support for utility-scale solar in the Uk, which carried most of Europe’s 2015 growth on its shoulders.
If Brussels sets the scene well – ending the Minimum Import Price as soon as possible allowing access to lowest-cost modules, passes ambitious targets in the Renewable Energy Directive and designs the Electricity Market in a way that enables society to tap solar’s technical and cost advantages – a new European solar era will be unleashed, pushing annual demand to growth levels as high as 20 GW in 2020. However, if decision makers in European countries with great solar development potential, such as Germany or Spain, continue to neglect solar’s benefits for society, the pioneers in Europe are in danger of being left further behind Asia and the Americas. The Low Scenario estimates annual additions of 8 GW in 2020, which means that in each of the coming 5 years Europe will see less solar installed than in 2015.
as of 2017, Europe is anticipated to return back to a growth path for the coming years. for an increasing number of consumers in Europe, distributed generation combined with other smart solutions represents the perfect way to control their energy bill. Other behavioral factors play a role in individual decisions. It is the economic benefits of solar, which is much cheaper than retail electricity in most European markets already today and will continue to decrease in cost, that will be the key motivation for people to invest in on-site generation – an important driver for growth on the Continent. The Medium
FIGURE 17 EUROPEAN ANNUAL SOLAR PV MARKET SCENARIOS 2016-2020
25
20.1 20
15 GW
24% 17%
10.2 20%
10
8.2
8.0
16% -11%
5
5.6
0 2010
2011
Historical data
2012
2013
2014
Low Scenario
2015
2016
2017
High Scenario
2018
2019
2020
Medium Scenario
© SOlaRPOWER EUROPE 2016
30 / SolarPower Europe / GLOBAL MARkET OUTLOOk fOR SOLAR POWER 2016-2020
Europe has surpassed the impressive level of 100 GW of cumulative grid-connected solar power in the first quarter of 2016. In the High Scenario, the European solar power market could grow by over 75% to 170.9 GW by the end of 2020. In the Low Scenario, a 33% growth rate would lead to only 129.6 GW of total solar power. Political support for solar power varies a lot in European countries. Despite solar’s impressive cost improvements, most European governments are not supporting the technology to an extent seen in the world’s leading markets in Asia-Pacific and America. Europe’s three largest solar markets in 2015 – Uk, Germany, france - will be among the largest contributors to solar growth on the Continent until 2020, although the policy environment, in particular in the Uk, and also Germany, is not solarfriendly these days. However, a functioning infrastructure
- including standards, a large number of solar installers, utilities increasingly engaging in solar, and storage & solar product offers attracting new groups of customers – will keep these developed markets going. One of the largest solar markets in Europe will be Turkey, though for very different reasons. Turkey’s economy is growing faster than for the rest of Europe, its population is quickly increasing – and so is demand for electricity. Unlike the EU, Turkey has no power generation overcapacities; low cost solar is a welcome contribution to satisfy growing power demand. The Medium Scenario expects 15 European markets to add each at least 500 MW until 2020, with the largest two – Germany and Turkey – adding over 8 GW, which is expected to result in 52 GW of new solar installations (see fig. 19).
FIGURE 18 EUROPEAN TOTAL SOLAR PV MARKET SCENARIOS 2016-2020
180
170.9
160 140
11% 10%
120
107.3 97.1
100
129.6
9%
8%
GW
8%
102.7
80 60 40 20 0 2010
2011
2012
Historical data
2013
2014
Low Scenario
2015
2016
2017
High Scenario
2018
2019
2020
Medium Scenario
© SOlaRPOWER EUROPE 2016
SolarPower Europe / GLOBAL MARkET OUTLOOk fOR SOLAR POWER 2016-2020 / 31
3 thE EUROPEan SOlaR MaRKEt PROSPECTS 2016 - 2020 / CONTINUED
FIGURE 19 TOP EUROPEAN SOLAR PV MARKETS’ PROSPECTS 2015 Total Capacity (MW)
2020 Total Capacity Medium Scenario by 2020 (MW)
2016 - 2020 New Capacity (MW)
2016 - 2020 Compound Annual Growth Rate (%)
39,696
48,396
8,700
4%
Turkey
266
8,698
8,433
101%
France
6,511
12,781
6,270
14%
United Kingdom
9,149
14,174
5,025
9%
Italy
18,613
22,613
4,000
4%
Netherlands
1,394
5,044
3,650
29%
935
3,985
3,050
34%
5,445
7,205
1,760
6%
Poland
84
1,702
1,618
82%
Denmark
791
2,291
1,500
24%
Switzerland
1,394
2,675
1,281
14%
Greece
2,606
3,691
1,085
7%
Belgium
3,241
3,966
725
4%
Romania
1,325
1,925
600
8%
4
512
508
160%
5,672
10,393
4,720
13%
Germany
Austria Spain
Ireland Rest of Europe
Political support prospects
FIGURE 20 CAPACITY ADDITIONS AND SHARES OF TOP 10 EUROPEAN SOLAR PV MARKETS IN 2015 AND 2020 2015
2020
Rest of Europe 6.1%; 497 MW Romania 1.2%; 102 MW Austria 1.8%; 150 MW Denmark 2.2%; 183 MW Turkey 2.5%; 208 MW Italy 3.7%; 300 MW Switzerland 3.7%; 300 MW
United Kingdom 44.9%; 3,686 MW
Rest of Europe 16.4%; 2,431 MW
Turkey 16.9%; 2,500 MW
Denmark 2.7%; 400 MW Poland 3.4%; 500 MW Netherlands 5.1%; 750 MW
Netherlands 5.5%; 450 MW
Spain 5.1%; 750 MW France 10.7%; 879 MW Austria 6.4%; 950 MW Germany 17.8%; 1,461 MW
United Kingdom 6.7%; 1,000 MW
Germany 16.9%; 2,500 MW France 12.1%; 1,800 MW Italy 8.4%; 1,250 MW
© SOlaRPOWER EUROPE 2016
In 2020, Germany and Turkey are expected to be the largest European solar markets, according to the
Medium Scenario, followed by france, Italy and the Uk, which dominated Europe’s solar sector in 2015.
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4 SOlaR In thE EUROPEan ElEctRIcItY SYStEM 2000 – 2015 UPDATE © Photo courtesy of REC Solar
Solar power is supplying 4% of electricity demand in the European Union, based on the total installed PV capacity by the end of 2015.
In Italy, around 8% of power consumptions is supplied by solar PV. The EU’s top three solar electricity consumers are Italy, Greece and Germany, where solar covers more than 7% of their needs. With 17 of the 28 EU members having solar contribute more than 1% of their electricity demand, the message is clear: Solar is becoming an established player in the European Union’s power generation portfolio. As in the last few years, in 2015 PV was again among the top two electricity generation sources installed in the European Union. Solar and wind combined around 20 GW, equal to about 75% of newly added capacities in 2015. Coal, nuclear as well as gas saw significantly more decommissioning of power plant capacities than new additions.
FIGURE 21 PV CONTRIBUTION TO THE ELECTRICITY DEMAND IN THE EU-28 IN 2015
9 8 7 6
%
5
4%
4 3 2 1
Fr an ce C yp ru s Po rtu ga l Au st ria N et he rla nd s
ar k Sl ov en ia Sl ov ak ia
De nm
Ki
U ni
te d
M al ta
ng do m
an ia
Ro m
Sp ai n
ga ur op ria ea n U ni on Be lg C iu ze m ch Re pu bl ic
an y
Bu l To ta lE
G er m
re ec e G
Ita ly
0
© SOlaRPOWER EUROPE 2016
34 / SolarPower Europe / GLOBAL MARkET OUTLOOk fOR SOLAR POWER 2016-2020
Still, more new coal power plant capacities were added in 2015 (4.7 GW) than the year before (3.3 GW), clearly showing that the Emission Trading Systems (ETS) is not delivering as it currently fails to drive polluting coal out of the market. The EU 28 has still more than half of its power fleet based on inflexible technology – 26% coal and 26% nuclear.
a specific plan for Member States is urgently needed to organize an orderly retreat from coal and end the situation of generation overcapacities due to inflexible technologies in Europe.
FIGURE 22 POWER GENERATION CAPACITIES ADDED IN THE EU-28 IN 2015 15
12,800
10
7,655 4,714 Decommissioned Installed
5 MW
1,867 232
119
4
4
0
0 -518
-281
-1,825 -5
-3,282
-4,254
-8,051
-10 Solar PV
Wind
Coal
Solar PV
Gas
Biomass
Hydro
Other Renewables
Waste
Geo-Thermal
Ocean
Fossil Fuels
Fuel Oil
Nuclear
Peat
Decommissioned
Source: SolarPower Europe, Wind Europe
© SOlaRPOWER EUROPE 2016
FIGURE 23 NET POWER GENERATION CAPACITIES ADDED IN THE EU-28 FROM 2000 TO 2015 160 140
137.5 120.6
120
95.4
100
GW
80 60
20
8.9
8.2
4.6
3.1
0.4
0.3
0.01
0 -20
-11.8
-40
-32.6
-39.6
-60 Wind
Gas
Solar PV
Solar PV Source: SolarPower Europe, WInd Europe.
Hydro
Biomass
Other Renewables
CSP
Waste Geo-Thermal
Fossil Fuels
Peat
Ocean
Nuclear
Coal
Fuel Oil
Decommissioned Installed
40
Decommissioned © SOlaRPOWER EUROPE 2016
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4 SOlaR In thE EUROPEan ElEctRIcItY SYStEM ASSESSMENT Of 2020-2030 ENERGY TARGETS
as the European Union agreed on a 27% renewable energy target for 2030, SolarPower Europe calls for an increase to a more ambitious 35% goal, that would more appropriately reflect the cOP 21 agreement from Paris, which strives to limit global warming to 1.5 °c. The Renewable Progress Report presented by the European Commission in 2015 shows that france, Luxembourg, Malta, the Netherlands, the United kingdom and to a lesser extent, Belgium, Spain, Hungary and Poland are lagging behind and will have to increase their efforts in order to meet their legally binding renewable energy targets by 2020. In addition, while several Member States are currently on track, they will have to intensity their efforts as their trajectory becomes steeper towards the end of the decade.
fast cost decrease of solar, these countries now have a renewed opportunity to comply with their obligations while accelerating the transformation of their power, transport and heating sectors. Looking at 2020, SolarPower Europe forecasts that PV could contribute between 5.2% (Low Scenario) and 7% (High Scenario) of the European electricity demand. This has to be compared to the 4% achieved at the end of 2015.
As shown in figure 24, substantial parts of the anticipated gaps in many of these countries could be filled by solar considering our High Scenario. With the
In the following decade, our modelling suggests that between 10 and 15% of Europeans’ electricity needs will be covered by solar. Assuming no-growth for electricity demand by 2030, reaching a 15% share would require the European solar market to increase from 100 GW today to a total of 375 GW. This means an annual 18 GW market until 2020 and an average of 20 GW in the coming decade. Taking into account that the European solar power market was already at an annual level exceeding 22 GW in 2011, this is possible – and at a fraction of the cost.
FIGURE 24 POSSIBLE SOLAR PV CONTRIBUTION TO EU-28 2020 RES TARGETS
FIGURE 25 POSSIBLE SOLAR PV CONTRIBUTION TO EU-28 ELECTRICITY DEMAND BY 2030
100
400
90
15%
350
80 300 70 250
10% GW
%
60 50 40
200
7.0%
150
30
5.2% 100
20 50
10
Au Be str l ia Bu giu lg m C aria C ro ze ch C atia Re ypr p u D e ub s nm lic Es ar t k Fi onia nl Fr and G an er c m e G any r H eec un e g Ire ary la nd It La aly L Lu ith tv xe ua ia m ni bo a u N et M rg he al rla ta n Po ds Po lan d Ro rtug m a Sl a n l ov ia Sl a k ov ia en U S ia ni te S pa d we in Ki d ng en do m
20 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 30
0
0
High Scenario
High Scenario 2020
Possible PV contribution to reduce RES commitment gap under High Scenario
Low Scenario
Low Scenario 2020
PV contribution to RES penetration in 2020 under Low Scenario
Medium Scenario
Extrapolated High Scenario 2030
Expected RES penetration in 2020 (PV not included)
Historical data
Extrapolated Low Scenario 2030
Gap between RES commitments and expected realization under High Scenario for PV
© SOlaRPOWER EUROPE 2016
36 / SolarPower Europe / GLOBAL MARkET OUTLOOk fOR SOLAR POWER 2016-2020
© SOlaRPOWER EUROPE 2016
4 SOlaR In thE EUROPEan ElEctRIcItY SYStEM TENDERS fOR SOLAR POWER
Tender systems are a good tool for creating transparency in power generation costs, in particular for technology with decreasing costs. Despite the burden of the Minimum Import Price (MIP), which kept prices in the EU for modules from the world’s largest manufacturing country, China, artificially high, European developers were able to bid at competitive prices. Without the MIP, European developers would offer an even more competitive option for European society to make the transition to a clean power economy. Even in Germany, with its rather low irradiation levels, the pilot solar tenders resulted in average purchase offers from the regulator to the successful bidders at low costs, which have continued to fall from the first to the fourth tender – from 0.092 Euros per kWh in April 2015, 0.085 EUR in August, 0.08 EUR in December, and 0.074 EUR in April 2016. The following figure shows how a 0.0741 EUR/kWh solar power purchase price in Berlin (most of the German bids were awarded to systems in the state of Brandenburg) could be translated to other European capitals – with all other assumptions maintained equal (CAPEX, OPEX and cost of capital). The simplified model shows how costefficient solar has become throughout Europe under the
current regulatory conditions even with access to components with punitive import duties on the world’s largest supplying nation. In Madrid, it should be possible to generate solar power at a level of around 0.045 EUR/kWh and in the south of Spain even below 0.04 EUR. Several European countries, where utility-scale solar provided the base of the solar growth in the past, have yet to establish solar tenders after they abandoned the traditional feed-in-tariff schemes, such as Spain, Czech Republic or Bulgaria. In addition, these countries and a number of others in Europe have implemented retroactive measures that have damaged the confidence of investors as well as the countries’ attractiveness for energy investments. These measures include feed-in-tariff cuts for existing installations or later limitation to operating hours, like in Spain. In Belgium, the region of Wallonia has decreased the number of years of payment for the Green certificates for existing installations. As a consequence, the cost of capital for financing solar power plants in such markets is at much higher levels than in stable countries, like Germany, countering the cost reduction progress of solar technology and regional advantages.
FIGURE 26 THEORETICAL SOLAR GENERATION COST IN DIFFERENT EUROPEAN CITIES WHEN APPLYING CONDITIONS OF GERMAN Q1/2016 TENDER (EUR/kWh) Warsaw Brussels Amsterdam
0.0741
Berlin London Stockholm Bucarest Bordeaux Ankara Rome Lisbon Athens Madrid
0
0.01
0.02
0.03
0.04
0.05
0.06
0.07
0.08
EUR/kWh © SOlaRPOWER EUROPE 2016
SolarPower Europe / GLOBAL MARkET OUTLOOk fOR SOLAR POWER 2016-2020 / 37
5 GlObal MaRKEt OUtlOOK FOR SOlaR POWER © Photo courtesy of REC Solar
After the world united at COP 21 in December 2015 in Paris, agreeing that global warming should not exceed 2 °C, and if possible even stay below 1.5 °C, the time has come to implement the best tools to achieve these ambitious goals. The solutions are obvious replacing fossil fuels with renewable energies is one of the fastest and most cost effective ways to cut greenhouse gases. Recent technical and cost developments clearly indicate that solar is the preferred renewable energy choice to combat global warming.
Today’s solar power plants can generate electricity at price levels that are increasingly below new conventional power plants. Costs continue to come down very rapidly. In the latest tenders unsubsidized solar power bids were even lower than the lowest-priced PPAs for onshore wind. At the distributed level, solar is cheaper than retail electricity in many countries today. Solar’s progress and potential for further cost reduction has caught the attention of many foresighted policymakers and is quickly spreading. Emerging markets in Asia and America are driving today’s growth through traditional support schemes, such as uncapped premium feed-in tariffs. However, if the share of solar power grows beyond certain levels, a further sustainable development will depend on a transformation to new market framework conditions. Intelligent and reliable new electricity market designs will be key for solar power to be able to contribute large shares into a country’s or region’s power mix. In an electricity market suffering from overcapacities, like Europe, it is foremost about retiring polluting coal power plants. It is also about market rules that are designed for variable renewable energy sources with zero marginal cost, that can be complemented with smart grids, storage, flexible power generation and demand side management tools. In particular, a move to tendering schemes for utility-scale solar needs proper design and sufficiently large volumes to work flawlessly. Self-consumption and storage of distributed solar requires the development of new business models, based on frameworks at the retail level, which appropriately remunerate the true value of solar power, and where solar is not hindered through high taxes or other obstacles. If the market design conditions are set correctly, respecting solar and other renewable technologies’ specifics, solar power as the lowest-cost renewable energy will be able to fully serve society and the global economy. This will keep costs as low as possible in the world’s transformation process to clean power generation and in time to meet the ambitious Pairs Climate Summit targets.
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SolarPower Europe (European Photovoltaic Industry Association) Rue d’Arlon 69-71, 1040 Brussels, Belgium T +32 2 709 55 20 / f +32 2 725 32 50
[email protected] / www.solarpowereurope.org
ISBN 9789090298146
