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The theme of last week’s Lux Executive Summit was innovation without borders. China was a focus, as was the topic of whether corporate venture capital and private venture capital can get along.

Based upon the large number of corporate venture capital representatives, that question had a high degree of resonance with the attendees. According to Andrew Williamson from Physic Ventures, though, the answer to this question is fundamentally a matter of “Sustainable Living.”

Solar PV looks to new markets

The subject of crossing borders flowed into the question of where the solar PV industry was headed now.

On this topic, Ted Sullivan kicked off the first day with a presentation entitled “Taking Away the Punch Bowl: Forecasting Solar in an Era of Declining Subsidies”.

Subsidies being slashed

Ted Sullivan of Lux Research

In his presentation, Sullivan noted that the solar PV industry is almost entirely dependent upon subsidies, with some 90% of PV markets supported by some form of subsidy. Lux’s view is that “of the 15.6 GW solar market in 2010, 50% was funded via tax-based subsidies.”

While subsidization is nothing new in the energy business, there are widespread concerns about the sustainability of subsidization in the PV industry. Of particular concern is that the governments in Solar PV’s core markets are debt-ridden, and “bankrupt (and financially strained) governments are
slashing subsidies.”

What will drive growth in place of subsidies? Sullivan stated that, “we see Time-of-Use Pricing as the number one driver of solar.”

Where does growth come from?

With the German market saturating and expected to slowly decline in size, the big question is where will the industry’s growth come from next? In fact, Sullivan questioned whether there would be a single ‘next Germany’.

Lux has forecasted strong growth in the US market and renewed growth in the Japanese market. Both markets are expected to match the size of the German market by 2014. Even strong growth in the US and Japan, however, will not support the high overall industry growth of the past decade. Without new market development, Lux has forecast modest growth through 2012.

Sullivan instead suggested that the industry needed to find many small attractive markets to drive future growth. He described this as “the next Greece x10”; many attractive, but smaller markets.

India, South Africa and UK next targets

Lux presented the result of a comprehensive assessment of world solar PV markets for short-term demand and long-term potential. Through this analysis, India, South Africa and the United Kingdom emerged as the top solar PV market targets.

India stands out as “the industry’s next big hope.” Beyond a high amount of sunshine, factors pushing India forward include its high portion of T&D losses (over 30%), high current and projected electricity demand, and positive overall policy outlook.

Sullivan cited domestic content along with bureaucratic and financial hurdles as factors that may impede the growth of the Indian market. India does have domestic content provisions similar to the Ontario market. Unlike Ontario, however, thin film manufacturers have still been able to participate. Summit attendee Mark Chen of Abound Solar, for example, confirmed that his company was expanding into the Indian market due to the favorable treatment on domestic content provisions for thin film modules.

Whether India or South Africa leads new PV market development, one thing is certain. The fast-paced solar PV industry is in for yet more change.

PV market shifting to emerging economies

According to Lux, “within five years one-third of the 32 GW solar market will be in new countries – many emerging economies.” That is good news as the industry will “no longer be critically dependent on a few subsidies in rich countries.”


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