In the end, seven or eight panel manufacturers with a capacity of 4 to 5 GW each will dominate the market, the report predicts, compared with the current situation where the bulk of the companies have a capacity of a few hundred megawatts each.
Subsidies fade, but demand rises
The International Energy Agency forecasts cumulative solar installations of 662 GW from 2012 to 2035, or an average of 29 GW per year. According to the Citigroup report, that's too conservative -- the analysts forecast growth of 34 GW per year. But even under the IEA scenario, solar would represent 11.2 percent of all new installed generation capacity and 13 percent of the investment in generation capacity.
Although the main solar markets are in Europe today, the continent's importance to the technology will diminish as subsidies are reduced in several countries. New solar installations will drop from 4 GW last year in Italy to 1.5 GW this year, and from 7.6 GW in Germany to 3 GW, the report forecasts.
Meanwhile, China will double its installations to 10 GW, Japan will go from 2.7 GW last year to 5 GW this year and the United States will go from 3.2 GW to 4 GW. The most important emerging markets will be in the Middle East, which will install 3.5 GW by 2016 from next to nothing now, and India, which will install 1.3 GW per year by 2016, according to the report.
"While historically core markets will provide support, this growth will come from new regions and markets, some already established, others yet to materialize," the analysis says. "China will become a larger part of the global market as the government supports demand by setting a sharply higher annual installation target of 10 GW."
Europe accounted for nearly 50 percent of 2012 demand, with most of it fueled by unsustainable subsidies. In a separate report, Deutsche Bank analyst Vish Shah said that this year Europe will account for only 20 percent of the overall demand. But these European installations will be much less dependent on subsidies.
"We expect 33 percent of demand within Europe to come from sustainable markets as we expect developers in Italy and other Southern European regions to develop projects without subsidies," Shah said. "More importantly, we expect demand from sustainable markets to account for 66 percent of overall demand in 2013 compared to 30 percent in 2012."
Solar is now cheaper than diesel-based electricity generation in many markets such as India and Africa, where a stable and sustainable energy supply at fixed costs such as solar is becoming a more attractive option for policymakers concerned about rising energy demand.
Reprinted from Climatewire with permission from Environment & Energy Publishing, LLC. www.eenews.net, 202-628-6500