State of the Solar Union [In My View]

On the surface, solar still looks to be but a drop in the ocean of power generation. Cumulative global capacity for solar by the end of 2010 stood at about 37 GW, a mere 0.78% of the overall total electricity capacity of 4,742 GW. And factor in the lower-than-average capacity factor of 20-25% for photovoltaics (PV), the dominant solar technology by far, and solar's contribution to global electricity generation becomes smaller still.

Global Growth

Global growth will likely slow in the near term; demand will diffuse to secondary markets. Global PV installations are expected to be around 25 GW by 2014. Solar enthusiasts may be disappointed at the relatively mild annualized growth rate of 13%, compared to the 50%-plus growth exhibited over the previous half decade, which is a function of steep subsidy cuts affecting the handful of feed-in tariff-driven markets that have fueled most of the industry's rabid growth in recent years. Germany is likely to see a drop in installations in 2011, followed by a flattening out thereafter, as a relentless series of tariff cuts lowers the attractiveness of investing in solar systems there. Similarly, Italy, which reached its 2020 goal of 8 GW of cumulative installations in 2011, will also heavily cut back on tariff payments in 2011 and 2012—the simple reason being that demand in both these markets will far exceed levels that policymakers are comfortable paying for.