Specifically, European markets, led by Germany and Italy, have absorbed Feed-In Tariff (FIT) rate cuts of up to one-third between January 1, 2010 and July 1, 2011. These reductions have caused Q1'11 demand in Germany, the world's largest PV market, to collapse to less than half of its Q1'10 size. In addition, overall European full year demand is expected to flatten in 2011 after increasing more than 170% from 2009 to 2010. The policy adjustments have hit large ground-mount systems on agricultural land. Even though investment returns across the range of residential and commercial roof-mounted installations remained attractive in 1H'11, end-customers did not start to respond to fast-falling prices until June 2011.     

Europe is now projected to represent 65% of world PV demand in 2011, down from 82% in 2010, while the US will grow from 5% to 9%. The top five Asia Pacific markets led by Japan and China accounted for 11% of global demand in 2010, a share that will grow to 16% in 2011. The market share of these Asia Pacific countries is projected to increase steadily to reach at least 26% by 2015, while the US share rises to 14% by that year. In contrast to the European challenges, PV project pipelines in the US, China and India collectively now stand at 25 GW.     

“Project development activity is intense in these countries,” said Craig Stevens, President of Solarbuzz. “Successful delivery of these pipelines will first require a host of incentive mechanisms. Regulatory, financing, project structure and permitting issues must be overcome.”     

European distribution margins held up better than expected during 2010 and early 2011, as project margins collapsed, causing a refocusing of business models and channels to market. Europe benefited from sharply lower prices during 1H'11 which, in particular, helped maintain Italian demand impetus. The avoidance of mid-year FIT reductions in Germany will now aid demand recovery in 2H'11. Chinese module supplier prices in Europe were as much as 25% below their European and Japanese competitors back in Q1'10. This discount steadily reduced to a low of only 10% in February 2011. However, it spiked again toward the end of Q2'11.     

In China, domestic demand more than doubled in 2010, with Ningxia and Jiangsu once again the two largest provincial markets, while the utility segment accounted for 49% of the national market. In 2010, China was the second largest market in the Asia Pacific region, second only to a rejuvenated Japan whose 111% Y/Y growth was driven by residential demand, accounting for 82% of the market. Strong solar policy support already in place before the Fukushima nuclear disaster indicates that the Japanese market is projected to grow to between 1.3-1.5 GW in 2011.     

In the US, soaring utility demand is redefining end-market, product mix and channels to market. Chinese module manufacturer market share increased to 37% in 2010, led by Suntech Power, Trina Solar and Yingli Solar, with their share building again during Q1'11. In 2010, distribution channel shipment share saw a small drop to 23%, while project developer and direct utility procurement emerged as formidable new channels. In 2011, the US market is projected to reach around 2 GW, growing to as high as 6.4 GW by 2015.   

 “With the US utility segment projected to soar to 54% of the total market in 2012, significant changes in module supplier, inverter manufacturer, project developer, distributor, and system integrator market shares are likely to occur over the next five years,” added Stevens.     

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