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Industry, materials market analyses shed new light on state of global solar PV

July 26, 2011 - The solar photovoltaics industry is gaining ground on wind energy and closing the gap with wind power's previously "unassailable lead" in renewables investment worldwide, according to a new study, though other recent analyses indicate that solar industry is being buffeted by market forces that leave its immediate future uncertain.

The study, published this month by the Frankfurt School/UNEP Collaborating Center for climate and sustainable energy finance, and Bloomberg New Energy Finance, found that last year overall investment in wind energy amounted to $94.7 billion.

Spending on large-scale solar projects, in contrast, reached just $26.1 billion, followed by $11 billion combined for biomass and waste-to-energy plants, according to the analysis, Global trends in renewable energy investments 2011. (See related chart: PV Equipment Spending Forecast Scenarios (US$ million)).

But these figures overlook small-scale PV projects, which together represent significant investments, the study noted.

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Small-scale distributed capacity solar investment ballooned to $60 billion in 2010, nearly double the $31 billion invested in 2009.

The expansion was fueled by feed-in tariffs in Germany and other European countries, the study said.

Spending on small-scale PV plants, combined with solar's lead in government and corporate research and development, the study noted, was almost enough to offset wind energy's big lead in new investment last year.

PV Equipment Spending Forecast Scenarios (US$ million)

Analysts at VB Research found this pattern has continued into 2011. Solar project financing exceeded $15 billion in the second quarter of 2011, a 71% increase on the $9.2 billion registered in the first quarter of 2011 and more than double the 2010 quarterly average of $6.2 billion.

"The increase in solar project financing volumes was so significant that solar project financing exceeded wind for the first time," VB Research said in its Clean Energy Pipeline analysis on July 14.

Part of the solar industry's success is attributed to the fall in module costs, which have plummeted 60% since the summer of 2008, according to Bloomberg New Energy Finance estimates, putting solar generation on a par with retail electricity prices in several sunny countries.

Overall global investment in renewables reached a record $211 billion last year, up 32% from $160 billion in 2009, according to the Frankfurt report.

Worldwide renewables investment was boosted in particular, the report said, by wind energy development in China and small-scale photovoltaic installations on rooftops in Europe.

A further "striking feature" of renewables investment in 2010, the Frankfurt report said, was that developing countries overtook developed economies for the first time in financial new investment -- that is, money invested in renewable energy companies, utility-scale generation and biofuels projects.

Developing nations invested $72 billion in renewable resources, edging developed countries with $70 billion of investments.

Although China dominated the developing-country sector with new investment of $48.9 billion in 2010, up 28% from 2009, South and Central America investments jumped 39% to $13.1 billion, while the Middle East and Africa soared 104% to $5 billion and India 25% to $2.8 billion.

Despite this massive investment in renewables, green energy aside from large hydropower still accounts for only a small portion of world electricity generation, according to the Renewables 2011 Global Status Report, also published in July by Paris-based organization REN21.

Renewables without hydroelectricity accounted for 3%, or 621 TWh, of global power production of 20,700 TWh in 2008.

Two years later, in 2010, its share was 3.3%, or 704 TWh, of total global generation of 21,325 TWh -- an increase of non-hydropower renewable energy over two years of 83 TWh per year.

Like the Frankfurt analysis, the REN21 study found rocketing growth in solar PV installations.

"Solar PV surged with more than twice the capacity installed as the year before. No technology has benefitted more than solar from the dramatic drop in costs," the Renewables 2011 Global Status Report said.

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