The Photovoltaic Market in Asia and Pacific Region

2009 was the year of speculations about a contracting or increasing photovoltaic market. The latest market estimates in spring 2010 came as a surprise for most people. The current estimates are between 7.1 and 7.8 GW, as reported by various consultancies. Like in
earlier years our estimates are in between with 7.4 GW.

This represents mostly the grid-connected photovoltaic market. To what extent the off-grid and consumer product markets are included is not clear. After a slow start, the markets began to pick up pace in the second quarter, but the real boom happened in the last quarter when in Germany alone, according to the German Federal Network Agency, 1.46 GW of new capacity were added.

With a cumulative installed capacity of 16 GW the European Union is leading in PV installations with a little more than 70 % of the total world-wide 22 GW of solar photovoltaic electricity generation capacity at the end of 2009. The unexpected growth in 2009 is due to the larger than expected market expansions in a number of countries and the exceptional development in the German market, where in the 4th quarter of 2009 alone 2.3 GW, or 60 % of the annual 3.8 GW installations were connected to the grid.

The second largest market was Italy with 730 MW followed by Japan (484 MW), the US (470 MW), the Czech Republic (411 MW) and Belgium (308 MW).

Asia and Pacific Region

The Asia and Pacific Region shows an increasing trend in photovoltaic electricity system installations. There are a number of reasons for this development ranging from declining prices, heightened awareness, favourable policies and the sustained use of solar power for rural electrification projects. Countries such as Australia, China, India, Japan, Malaysia, South Korea, Taiwan, Thailand and The Philippines show a very positive upward trend thanks to increasing governmental commitment towards the promotion of solar energy and the creation of sustainable cities.

The introduction or expansion of feed-in-tariff is expected to be an additional big stimulant for on-grid solar PV system installations for both distributed and centralised solar power plants in countries such as Australia, Japan, Malaysia, Thailand and South Korea. The Asian Development Bank (ADB) launched an Asian Solar Energy Initiative in 2010, which should lead to the installation of 3 GW of solar power by 2012. ADB will provide $ 2.25 billion5 (€ 1.73 billion) to finance the Initiative, which is expected to leverage an additional $ 6.75 billion (€ 5.19 billion) in solar power investments over the period.

Australia

In 2009 more than 56 MW of grid-connected solar photovoltaic electricity systems were installed in Australia, bringing the cumulative installed capacity of grid-connected PV systems to more than 80 MW about the same as the off grid systems. Most of the 2009 growth
was driven by a Federal Government rebate programme of AUD 8 per watt (5.33 €/W)6 (capped at AUD 8.000), which combined with Renewable Energy Certificates (RECs), offered the possibility of zero-cost 1 KWp systems. This programme was terminated and it is unclear how the market will develop after all the approved systems are installed in the first half of 2010. At the beginning of 2010, 8 out
of the 11 Australian Federal States and Territories had introduces some kind of feed-in tariff scheme for systems smaller than 10 kWp.

The expanded Renewable Energy Target (RET) scheme was proposed in 2009 to encourage additional generation of electricity from renewable energy sources to meet the Government’s commitment to achieving a 20 % share of renewables in Australia’s electricity supply in 2020. On 9 September 2009 two amendment bills went into force which increased the renewable energy target from 9,500 GWh to 45,000 GWh by 2020 and set Solar Credits (REC Multiplier), which is a mechanism under the expanded RET scheme which multiplies the number of RECs able to be created for the system.

India

For 2009 market estimates for solar PV systems vary between 30 to 100 MW. The launching of the Indian National Solar Mission in January 2010 should give impetus to the markets. The National Solar Mission aims to make India a global leader in solar energy and envisages an installed solar generation capacity of 20 GW by 2020, 100 GW by 2030 and 200 GW by 2050. The short-term outlook until 2013 was improved as well when the original 50 MW grid-connected PV system target in 2012 was changed to 1,000 MW in 2013.

Japan

When the Japanese Residential PV Dissemination Programme ended in FY 2006 after 12 years it had resulted in a cumulative PV system installation of 1,617 MW, out of 1,709 MW total installed PV capacity. However, in FY 2007 the Japanese market declined to 210 MW and only recovered slightly to 230 MW in 2008. In general, the end of the Residential PV System Dissemination Programme was considered the main reason for the decrease of new installations, but not so much because of the phase-out of the financial incentive but because this was perceived as lack of political support.

In order to counteract this development METI developed the “Action Plan for Promoting the Introduction of Solar Power Generation” and reinstated an Investment Support Programme at the beginning of 2009. Finally the law on the Promotion of the Use of Non Fossil Energy Sources and Effective Use of Fossil Energy Source Materials by Energy Suppliers was enacted in July 2009. With this law, the purchase of “excess” electricity from PV systems is no longer based on a voluntary agreement by the electric utility companies but it became a National Programme with cost burden sharing of all electricity customers.

In November 2009 METI started, in the framework the review of the Basic Energy Plan, to look into potential scenarios for the introduction of a feed-in tariff scheme for renewable energies in Japan. In the spring of 2010 a public consultation about the introduction of such a feed-in-tariff scheme was launched.

These measures resulted in a strong recovery performance of the Japanese market in 2009 when more than double of new capacity than in 2008 was added. 484 MW newly installed capacity increased the cumulative installed PV capacity to 2.6 GW.

People’s Republic of China

Despite the fact that the Chinese PV market more than tripled in 2009 to approximately 160 MW, the home market is still less then 4 % of total Photovoltaic production. This situation will change, but the market will not grow as fast as expected last year, when a New Energy Stimulus Plan was discussed in addition to the various stimulus packages.

The unofficial target is 20 GW of cumulative PV installations in 2020. However, in the spring of 2010 it became clear that this New Energy Stimulus Plan would not come soon, but likely be integrated in the overall economic development strategy for the next decade. In July 2009 a joint notice was released by the Ministry of Finance, Ministry of Science and Technology and the National Energy Administration announcing subsidies for PV demonstration projects in the following two to three years through a programme called “Golden Sun”. The Government will subsidise 50 % of total investment in PV power generation systems and power transmission facilities in on-grid projects, and 70 % for independent projects, according to the notice. The available budget should allow about 500 MW of PV installations.

A national plan on renewable energy development issued in 2007 set a target to increase renewable resources to supply 15 percent of its total energy consumption by 2020. In December 2009 China amended its renewable energy law to require electricity grid companies to buy all the power produced by renewable energy generators. According to statements of senior Government officials published in various Chinese media, China will take radical measures to increase the use of new energy in the 12th Five Year Plan (2011-15), a move that reinforces the nation’s commitment to improve the energy mix and reduce pollution. According to a recent report by the World Bank, China needs an additional investment of $ 64 billion (€ 49.2 billion) annually over the next two decades to implement an “energy-smart” growth strategy.

However, the reductions in fuel costs through energy savings could largely pay for the additional investment costs according to the report. At a discount rate of 10 percent, the annual net present value (NPV) of the fuel cost savings from 2010 to 2030 would amount to $ 145 billion (€ 111.5 billion), which is about $ 70 billion (€ 53.8 billion) more than the annual NPV of the additional investment costs required.

South Korea

In 2009 the market in South Korea contracted to about 170 MW after the exceptional year 2008 where almost 300 MW were installed. The reason for this development was that the 500 MW cap on cumulative installations for the feed-in tariff scheme 2008 to 2011 was reached. Despite a 1.3 GW target of cumulative installed solar photovoltaic electricity capacity, the market outlook is unclear due to a missing support policy because only from 2012 a Renewable Portfolio standard was planned.

In January 2009, the Korean Government had announced the third National Renewable Energy Plan, under which renewable energy sources will steadily increase their share of the energy mix between now and 2030. The plan covers such areas as investment, infrastructure, technology development and programmes to promote renewable energy. The new plan calls for a Renewable Energies share of 4.3 % in 2015, 6.1 % in 2020 and 11 % in 2030.

Taiwan

In June 2009, the Taiwan Legislative Yuan gave its final approval to the Renewable Energy Development Act, a move that is expected to bolster the development of Taiwan’s green energy industry. The new law authorises the Government to enhance incentives for the development of renewable energy via a variety of methods, including the acquisition mechanism, incentives for demonstration projects and the loosening of regulatory restrictions.

The goal is to increase Taiwan’s renewable energy generation capacity by 6.5 GW to a total of 10 GW within 20 years. In December 2009 the Ministry of Economic Affairs (MOEA) announced the 20 years guaranteed feed-in tariffs for solar electricity to be 11.1 NT$7/kWh (0.264 €/kWh) to 12.9 NT$/kWh (0.307 €/kWh) in 2010.

Thailand

Thailand enacted a 15-year Renewable Energy Development Plan (REDP) in early 2009, setting the target to increase the Renewable Energy share to 20 % of final energy consumption of the country in 2022. Besides a range of tax incentives, solar photovoltaic electricity systems are eligible for a feed-in premium or “Adder” for a period of 10 years. However, there is a cap of 500 MW which are
eligible for the 8 THB8/kWh (0.182 €/kWh) “Adder” (facilities in the 3 Southern provinces and those replacing diesel systems are eligible for an additional 1.5 THB/kWh (0.034 €/kWh)). Within the three categories of PV rooftop systems, the Very Small Power Producer Programme (VSPP) for systems smaller than 10 MW and the Small Power Producer Programme (SPP) for systems with a maximum capacity of 90 MW, about 560 MW of PV projects were under consideration, 170 MW of projects were accepted, but without
Power Purchasing Agreement (PPA) and for 225 MW PPAs were already signed at the beginning of 2010.

Emerging Markets

Malaysia: The Malaysia Building Integrated Photovoltaic (BIPV) Technology Application Project was initiated in 2000 and at the end of 2009 a cumulative capacity of about 1 MW of grid-connected PV systems has been installed. The Malaysian Government officially launched their GREEN Technology Policy in July 2009 to encourage and promote the use of renewable energy for Malaysia’s future sustainable development. By 2015, about 1 GW must come from Renewable Energy Sources according to the Ministry of Energy, Green Technology and Water (KETHHA). The Malaysian Photovoltaic Industry Association (MPIA) proposed a five-year programme to increase the share of electricity generated by photovoltaic systems to 1.5 % of the national demand by 2015. This would translate into 200 MW grid-connected and 22 MW of grid systems.

In the long-term beyond 2030 MPIA is calling for a 20 % PV share. Pusat Tenaga Malaysia (PTM) and its IEA international consultant estimated that 6,500 MW power can be generated by using 40 % of the nation’s house roof tops (2.5 million houses) and 5 % of commercial buildings alone. To realise such targets, a feed-in tariff is under discussion at the moment and it is anticipated that it could be passed in the 3rd quarter of 2010.

First Solar (US), Q Cells (Germany) and Sunpower (US), have started to set up manufacturing plants in Malaysia, with a total investments of RM 12 billions and more than 2 GW of production capacities. Once fully operational these plants will provide 11,000 jobs and Malaysia will be the world’s 6th largest producer of solar cells and modules.

The Philipines: The Renewable Energy Law was passed in December 2008. Under the law the Philippines has to double the energy derived from Renewable Energy Sources within 10 years. In May 2009, the Department of Energy (DoE) published the law’s implementing rules and regulations (IRR).

A major driver is the dramatic electricity demand increase as the DoE has forecasted that 16,550 MW of additional capacity is needed from 2010 to 2030 to meet the population’s energy demand. The Remote Area Electrification Subsidy (RAES) Programme aims to support the country’s goal of achieving 100 % barangay (village) electrification by 2009 and 90 % household electrification by 2017. At the end of 2009 about 7 MW of PV systems were installed, mainly off-grid.

SunPower has two cell manufacturing plants outside of Manila. Fab. No 1 has a nameplate capacity of 108 MW and Fab. No 2 adds another nameplate capacity of 466 MW.

Arnulf Jäger-Waldau, European Commission, DG Joint Research Centre, Institute for Energy, Renewable Energy Unit Via Enrico Fermi 2749; TP 450 I – 21027 Ispra (VA), Italia. ec.europa.eu/