According to a just released report by Lux Research, India stands out as the top target in being the new Germany for Solar components. Germany currently represents roughly half the total global market for solar components – all thanks to explosive growth it fueled over the past decade through attractive solar subsidies. However, as the country is now dialing back its subsidy programs, solar companies will be scrambling to find the next big growth market for 2011 and beyond.
“Component manufacturers looking to maintain margins in the face of rapidly falling prices will find short-term relief from markets offering attractive subsidies in 2011,” said Jason Eckstein, a Lux Research Analyst and the report’s lead author. “However, to be able to plan for long-term solar growth, companies also need to consider other factors, such as the size of a country’s electricity market, what other generation sources it can tap, and the quality of its electrical distribution infrastructure.”
The report constructs a quantitative model for all 15 markets, based on the value of subsidies, market size, solar generation’s proximity to grid parity, and numerous other factors. It ranks each country on two axes – measuring short-term demand drivers and long-term market potential. Based on their positioning in either axis, markets fall into one of four market classes: Fast Burners, Top Targets, Slow Movers, and Weak Prospects.
According to the report,Cyprus, Israel, and Malaysia are Fast Burners. Although these markets offer some of the most valuable subsidies, they all face fundamental limits on the extent to which solar can grow. Cyprus in particular cannot support more than a few hundred megawatts of solar installations, while Israel and Malaysia are capped close to 3 GW.
India stands out as a Top Target, but South Africa and the U.K. could also be game-changers. India combines a heavily-funded subsidy scheme with a grid in great need of distributed generation and huge projected electricity consumption. South Africa has a significantly more attractive subsidy scheme but is limited to utility-scale applications and faces regulatory uncertainty. The U.K. has a comparatively weak solar resource, but faces tight natural gas supply, has a broad set of feed-in tariff (FIT) incentives, and boasts a potential market size over 20 GW.
Russia, Brazil, and Mexico are all Slow Movers. All offer huge electricity markets with over 10 GW of solar development potential, but lack incentive schemes. Brazil cancelled an FIT policy early last decade, yet it’s one of the markets closest to grid parity and offers massive potential demand. Mexico has enforced a national net metering policy, making it a likely future champion of solar as a distributed resource. Meanwhile, Russia offers few demand drivers in 2011, but the largest potential addressable solar market at over 80 GW.
As readers of Panchabuta are well aware, one of the eight National Missions outlined in National Action Plan on Climate Change, the Jawaharlal Nehru National Solar Mission (JNNSM) specifically focuses on solar energy and its role in minimizing future emissions. The Government has launched JNNSM in January, 2010 with a target of 20,000 MW grid solar power (based on solar thermal power generating systems and solar photovoltaic (SPV) technologies), 2000 MW of off-grid capacity including 20 million solar lighting systems and 20 million sq.m. solar thermal collector area by 2022. The Mission will be implemented in three phases. The first phase will be of three years (upto March, 2013), the second till March 2017 and the third phase will continue till March, 2022.
Government has also approved the implementation of the first phase of the Mission (upto March, 2013) and the target to set up 1,100 MW grid connected solar plants including 100 MW of roof-top and small solar plants and 200 MW capacity equivalent off-grid solar applications and 7 million sq.m. solar thermal collector area in the first phase of the Mission, till 2012-13.
During 2010-11 the Ministry has selected grid solar power projects of 800 MW capacity. Six major R&D projects in solar thermal and photovoltaic technologies have been sanctioned. National Centre for Photovoltaic Research and Education has been set up at IIT-Bombay.
Apart from this the Indian state of Gujarat that has been in the forefront of Solar energy development has released a state specific solar policy.Gujarat government has set the ambitious target of installing 1,000 Mw solar power capacity by the end of 2012 and 3,000 Mw in next five years. In this regard, the state has already signed PPAs for about 934MW.
The Indian state of Tamil Nadu one of the pioneers in renewable energy and the leader in Wind Energy with about 43% of the installed capacity in India has recently released a Solar Road map for the state. Further as readers might be aware Tamil Nadu has the third best solar insolation in the country and that varies from 5-5.6 kwhr/sq.m/day.
Rajasthan another Indian state where a number of projects in the National Solar Mission is being implemented, has also announced a separate solar policy for the state.
Given these developments, it is no surprise that Lux Research has identified India as a top target, though there seems to be a lot of skepticism and doubts regarding the National Solar Mission that has been raised by Bloomberg BusinessWeek (read here, here and here) though they seem to be very optimistic about the Gujarat state mission and have not criticized the same.
Panchabuta, believes that though there have been valid points that have been raised, a lot of those challenges are bound to happen whenever a new technology and mission has been well thought out and planned. We believe that the Ministry of New and Renewable Energy(MNRE) has taken a pragmatic approach to the policy by waiting for feed back from the first round of the first phase before refining the policy for the second phase with the learnings being incorporated into the same. This report by Lux Research seems to validate the approach being followed by MNRE.