MEDIUM-TERM OUTLOOK: RENEWABLE TECHNOLOGIES

160 MEDIUM-TERM RENEWABLE ENERGY MARKET REPORT 2012

capacity in China stood at 0.9 GW and 2011 additions turned out to be roughly 2.2 GW. The growth in China is driven by several incentives programmes as well as expectations that a renewable energy quota system will be established.

Figure 80 Solar PV installed capacity by country

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Germany Italy Japan Spain United States China RoW Note: Solar PV capacity corresponds to grid-connected capacity, which includes small distributed capacity. Sources: IEA-PVPS (2012), EPIA (2012), SEIA (2012a) and IEA analysis.

During 2011, many countries emerged as new players on the PV market. While their annual growth remains small for the moment, the potential should increase as supply chains develop. Diversification of the market to more countries should stem not only from the effect of generous incentives, but from the improved competitiveness of solar PV in more circumstances. Indeed, in sunny countries solar PV can compete without any incentives in off-grid and isolated grid applications. It is also competitive with bulk power on-grid from unsubsidised oil-fired generation. More importantly, in mature markets with high electricity prices, the unsubsidised solar PV generation costs of commercial and residential installations can be competitive with retail electricity prices, e.g. the south of Italy, southern Germany, some states of Australia and California. Manufacturing

Amid a period of major restructuring, the solar PV manufacturing industry has begun to transition from markets in which government supports play a pivotal role to new and more competitive, power-hungry markets. The European Photovoltaic Industry Association reports that 29.7 GW of capacity was added globally in 2011 (EPIA, 2012). According to Lux Research (Lux Research, 2012a), an emerging technologies consultancy, 28.4 GW of PV modules were produced globally, with the top ten manufacturers representing 44% of the market. First Solar and Suntech Power were market leaders, both with production around 2 GW in 2011. Based on shipments, Suntech with over 2 GW led the market slightly ahead of First Solar, reports IMS Research (IMS Research, 2012), an electronics market consultancy. Due to a large degree of overcapacity, the solar PV manufacturing industry is undergoing major consolidation. In 2011, many companies scaled back their production or restructured, and some

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