MARKET REPORT 2012

For EPIA Members Only February 2013

1. NEW MARKETS, NEW WORLD RECORD

The year 2012 was another historic one for the solar photovoltaic (PV) industry. For the first time, the cumulative global installed PV capacity passed the 100-gigawatt (GW) mark, achieving just over 101 GW. This capacity produces as much electricity as 16 coal power plants or nuclear reactors of 1 GW. Each year, these PV installations save 53 million tons of CO2. Around the world an estimated 30 GW of PV were connected to the grid and made operational in 2012, roughly the same as the record-setting amount level in 2011. These results are preliminary, and the 30 GW figure could be increased by an additional 1 or 2 GW when final numbers come in.

The findings presented here are the result of preliminary figures gathered by EPIA and the network of national PV associations in Europe and globally. The final results will be published in May 2013 in EPIAs Global Market Outlook for Photovoltaics 2013-2017.

Counting connected systems or installations?

For the last several years, EPIA has compiled market figures by counting systems connected to the grid (when such data are available and make sense). This is logical from an electricity production point of view. Counting installations (which may or may not have been connected) show a more realistic image how many PV systems have been sold in a particular timeframe. Depending on the method of calculation, the variation from one year to another may look different and change the final picture. In this document, installation should be understood as systems connected to the grid when this information is available.

Market Report 2012

February 2013

The non-European PV market grew much faster than it has in previous years, with a least 13 GW installed in 2012. The top three non-European markets were China, the US and Japan, which all accounted for more than 8.5 GW of newly installed capacity in 2012. Questions remain about the real size of Chinas market, which varies according to sources between 3.5 GW and 4.5 GW (we considered 3.5 GW in this document). Several other non-European markets performed well, including India, Australia, and Korea and to a certain extent Canada, Israel and Thailand. Very large projects have been announced in Chile, South Africa and several other markets, but their realisation will take longer than expected. The exponential growth rate in installed capacity seen in recent years is finally coming to an end, with market stabilisation after a 400% growth in two years. The growth outside Europe allowed the global market to reach the 30 GW mark again in 2012. This is mainly due to the fact that a 5 GW decrease in Europe in 2012 compared to 2011 was almost offset by a similar increase in all other markets combined. From 3 GW in 2010 to close to 8 GW in 2011 and at least 13 GW in 2012 in nonEuropean countries, the global market for PV is rebalancing.

2. EUROPEAN MARKETS: THE STORY BEHIND THE NUMBERS

In 2012, the market for PV in Europe decreased for the first time since 2006. This can be relativized if we look at the real installations (rather than connections) but the trend is the same: the market peaked in 2011 and went down in 2012 in Europe. Europe did not repeat its record year of 2011, when 22.7 GW were connected to the grid; in 2012 the number of connections went down 27%, with at least 16.6 GW connected.

Market Report 2012

February 2013

This hides various realities at national level; the market evolution was very different from one country to another. Even in Germany, the apparent market stability is the result of a chaotic evolution, due to regulatory changes and hectic responses from investors. Germany has seen three consecutive years with a roughly stable 7.5-7.6 GW of connections, leading to a total installed capacity in the country of a record 32 GW. This was accompanied by a progressive evolution in market dynamics, with 2012 showing PV gradually becoming self-sustainable. With PVs Levelised Cost of Electricity (LCOE) now lower than the price of retail electricity, at least in the residential and commercial segment in Germany, PV development can be at least partially driven by selfconsumption rather than only FiTs. Also, it should be remembered that the 7.5 GW connected in 2011 included 3 GW that had already been reported as installed in December 2011, but that were only physically connected in the first part of 2012; in other words, there is not really a constant level of 7.5 GW. A more realistic view of Germanys market in the last months shows a relative stabilisation at around 5-6 GW a year, quite far from the government expectations. In Italy, 3.3 GW of PV were connected to the grid in 2012. This is a significant decrease from the major boom seen in 2011, with 9.3 GW. But as was the case with Germany in 2011, many systems connected to the grid in Italy that year had actually been installed at the end of 2010. The numbers are different when analysing again the market from an installation point of view; in this case, the Italian market was closer to 4-5 GW in 2010, 6-7 GW in 2011 and around 3.5 GW in 2012. After the rush of 2011, the Italian market has returned to a level that nevertheless remains high. France scored third place among European countries in 2012, thanks again to previously installed projects finally being connected in 2012 along with a limited contribution from new installations. With 1.2 GW of PV in 2012, the country is still performing well below its theoretical potential. Behind that trio, UK installed 1.1 GW for the first time and Greece installed almost 1 GW (912 MW), a record level for this country hit by an extremely hard recession. Bulgarias boom led to 670 MW installed before the governments reaction. Belgium installed again a quite high level with 655 MW (some sources mention 525 MW); this preliminary result that will (as in the past) be revised throughout 2013 is the sum of a rapid decline in Flanders (anyway at 400 MW) and a rapid growth in Wallonia with an unsustainable 250 MW in the segment below 10 kW. Other countries such as Switzerland, Austria and Denmark contributed marginally to market development, even if the numbers they have reached are the result of a major market growth. Some countries, and notably Poland, failed to fulfil expectations in 2012 and the prospects for 2013 remain weak. In Spain, the government imposed an unexpected moratorium on FiTs, destroying what remained of the PV market; only 200 MW were connected to the grid in 2012 in this country, which should be among the European leaders. The long-expected net-metering scheme was never introduced and there are doubts as to whether it ever will be, given the governments fear of creating another boom. Czech Republic finally installed 116 MW, a more important achievement than expected but very far from the booming levels of 2009 and 2010. Europes total installed capacity at the end of 2012 of 69 GW will produce around 2.6% of Europes electricity demand in 2013, and about 5.2% of the peak electricity demand.

Market Report 2012

February 2013

 Table of largest markets (with at least 100 MW installed during 2012 or in total)
Country Cumulative End 2011 (final MW) 24678 12913 3000 875 624 145 2018 190 16 4900 145 1969 81 183 468 230 190 3500 4382,5 4914,43 460,91 1400 563 150 754 189,7 Market 2012 (final - MW) 7600 3337 1200 1100 912 670 655 230 200 200 125 116 114 30 10 170 131 3500 3200 2000 1000 800 200 210 209 60 Cumulative end 2012 (final - MW) 32278 16250 4200 1975 1536 815 2672 420 216 5100 270 2085 195 213 478 400 321 7000 7583 6914 1461 2200 763 360 963 250

EU 27

Europe

Germany Italy France UK Greece Bulgaria Belgium Austria Denmark Spain Netherlands Czech Republic Slovenia Portugal Slovakia Switzerland Ukraine China US Japan India Australia Canada Thailand Korea Israel

NonEurope

Market Report 2012

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3. OUTLOOK FOR 2013: MORE GROWTH, MANY QUESTIONS

The dynamics of the German market are likely to continue in 2013, driven by self-consumption and declining PV system prices in the first part of the year, but reaching 7.5 GW again will be a real challenge. New storage incentives could accelerate the transition to self-consumption in the residential and commercial market segments. The question of whether the transition will be fast enough to maintain high market levels has become more acute following the January 2013 restart of the debate on the cost of the EEG. In Italy the situation will be more complicated, but an evolution similar to that of Germany could happen as well, establishing the market at a lower level. For Europe, market development expectations are lower for 2013 than in 2012; 10 to 15 GW seems more in line with the market reality. Demand outside Europe will most probably continue to rise, with a visible effect on global market performance. With China likely to become the worlds largest PV market (official target for 2013 is set at 10 GW), and with many emerging countries appearing on the PV map, we can estimate that 2013 will see a global market development well above 30 GW. How much more the global market can grow in 2013 remains a question: A 15 GW showing in Europe could bring the world market easily above 35 GW, depending on the reaction of emerging markets. But a low market in Europe will most likely prolong the imbalance between supply and demand of PV components, making 2013 a difficult year for PV companies. As always, policy remains an important market driver. Political decisions that will be taken in the coming months, all over the world, will continue to shape PVs development and evolution to a mainstream source of electricity.

Market Report 2012

February 2013