1. Introduction

The year 2012 was another historic one for solar photovoltaic (PV) technology, which has experienced remarkable growth over the past decade and is on the way to becoming a mature and mainstream source of electricity. The world's cumulative PV capacity surpassed the impressive 100-gigawatt (GW) installed electrical power mark, achieving just over 102 GW. This capacity is capable of producing as much annual electrical energy as 16 coal power plants or nuclear reactors of 1 GW each. Each year these PV installations save more than 53 million tons of CO2.

Remarkably, even during a time of economic crisis, an estimated 31 GW of new PV capacity was commissioned around the world in 2012 – roughly the same as in the record-setting year of 2011. But even if the headline numbers remain stable, the story behind them is changing dramatically. The results of 2012 signal a turning point in the global PV market that will have profound implications in the coming years. For the first time in more than a decade, the European market for PV declined compared to the previous year. More vigorous growth in markets outside of Europe helped keep the global development of PV on an upward trajectory. Other factors – the approaching competitiveness of PV compared to other electricity sources, the changing nature of electricity markets, trade conflicts and the turmoil facing the PV industry due to consolidation – are also already affecting the market outlook for the near future.

This report assesses the European and global markets for PV in 2012, and makes forecasts for the next five years. It is based on an internal analysis of data1 from industry members, national associations, government agencies and electric utilities. The figures presented were discussed and analysed by key players from the PV industry at our 8th EPIA Market Workshop in Brussels in March 2013.

→ EPIA's major findings for 2012 include:

  • Around the world 31.1 GW of PV systems were installed in 2012, up from 30.4 GW in 2011; PV remains, after hydro and wind power, the third most important renewable energy source in terms of globally installed capacity
  • 17.2 GW of PV capacity were connected to the grid in Europe in 2012, compared to 22.4 GW in 2011; Europe still accounts for the predominant share of the global PV market, with 55% of all new capacity in 2012
  • Germany was the top market for the year, with 7.6 GW of newly connected systems; followed by China with an estimated 5 GW; Italy with 3.4 GW; the USA with 3.3 GW; and Japan with an estimated 2 GW
  • For the second year in a row, PV was the number-one new source of electricity generation installed in Europe
  • Under a pessimistic Business-as-Usual scenario, the global annual market could reach 48 GW in 2017; under a Policy-Driven scenario, it could be as high as 84 GW in 2017

→ A new world order

It is clear from the results of 2012 and the forecast for the coming years that Europe's leading role in the PV market is coming to an end. In 2011, Europe accounted for 74% of the world's new PV installations; in 2012 this number was around 55%. In 2013 it is almost certain that the majority of new PV capacity in the world will be installed outside of Europe. Part of the reason for the decline in Europe's numbers is a natural cooling down period after very strong growth in the previous two years. To be sure, there are still markets in Europe which have strong and still-untapped potential and room for significant PV growth. But this will occur at a more stable – and sustainable – rate than it has in the last few years. Going forward, the driving forces will be in countries like China, the USA, Japan and India. The PV market is becoming truly global.

→ Increasing competitiveness

PV markets in Europe and around the world continued making rapid progress in 2012 toward competitiveness in the electricity sector. The strong price decreases of PV technology, and increased electricity prices in general, have helped drive momentum toward what is often called "grid parity".

The moment is near when the savings in electricity cost and/or the revenues generated by selling PV electricity on the market could be equal to or higher than the long-term cost of installing and financing a PV system. This so-called "dynamic grid parity" appears within range in several EU countries, and has been reached already in some segments of some countries. In most countries, PV market deployment still depends on the political framework in place. Various national schemes – whether they are being introduced, modified, or phased out – have a significant influence on EPIA's forecasts and scenarios as they have serious consequences on national PV markets and industries. As shown by the substantial regulatory changes introduced by policymakers in several countries in 2012, dedicated financial support as the main driver for PV development is progressively vanishing. In the coming years, deployment strategies will depend much more on the capacity of PV power to actively participate in the electricity system.

→ PV in the electricity mix

For the second year in a row and the second time in history, PV in 2012 was the number-one electricity source in the European Union (EU) in terms of newly installed capacity. PV now covers 2.6% of the electricity demand and 5.2% of the peak electricity demand in Europe. As a result, it is already starting to have an effect on the structure and on the management of the electricity system. Grid and market integration challenges will therefore shape, much more than in the past, the capability to develop PV markets in the coming years.

The factors lined up against the continued strong growth of PV in Europe and around the world are formidable: a continuing economic and financial crisis; industry consolidation; a global market rebalancing; political and regulatory instability as governments reconsider their commitment to renewable energy sources and climate-change mitigation. But even in the face of all of this, the following report shows how, under the right conditions, the prospects going forward for solar PV – a clean, safe and infinitely renewable power source – remain solid.

The main questions are how and where continued PV growth will occur, and how committed policymakers are to making it happen.

More detailed information per country – including the evolution of support schemes; administrative procedures; national renewable energy objectives; and potential for PV – is available for EPIA Members at www.epia.org/news/publications/global-market-outlook-for-photovoltaics-2013-2017/

1 EPIA bases its analysis on PV systems that have been connected to the grid; the implications of this choice for how market growth is assessed and the differences between installations and connections are discussed in the Methodology section.