Solar Energy: The Sun Also Rises

Solar technology is being embraced worldwide; and in almost every case the resurgence in interest is directly linked to government policy.

One enthusiastic supporter of the technology is Japan. As a territory not exactly known for its mineral wealth and also hamstrung by factors that put hydro and wind power out of contention for renewable power sources, the enthusiasm with which the tiny nation has greeted solar technology should come as no surprise.
The oil crisis of the 1970’s provided the initial impetus, certainly since the seventies the nation has been intent on increasing its energy self-sufficiency. Indeed it was in 1974, hard on the heels of the first oil crisis of 1973 that the Sunshine Project, a government initiative tasked with conducting research into making the country energy self-sufficient, was set up.

Subsequent government-provided subsidies for residential solar units stimulated the market further. According to a report from the Solar Electric Power Association (SEPA) it was these changes in federal policy that really led to the Japanese embrace of the PV market.The report Policy Changes Trigger Resurgence of Japan’s Solar Market, points to the program of subsidies that commenced in the mid-1990s and ran until 2006 as driving the nation’s embrace of solar power.

Japan has more recently introduced another government measure set to drive further domestic investment – the program contributes to the cost of solar systems to the tune of 70,000 yen per 1 kW up to about 650, 000 yen, and has been in effect from the start of 2009.

Around the time the Japanese enthusiasm for solar was on the wane, the European markets took up the slack, also as a result of a change in government policy. Feed-in tariffs (FIT) accelerated investment in solar power by way of guaranteeing the purchase of any extra electricity produced, thus paying homeowners and business for excess energy.

Europe

There is no doubt that Europe leads the world in installed capacity with, according to a 2012 report from the European Photovoltaic Industry Association, about 75 per cent of global solar photovoltaic capacity.

The European Union‘s target of sourcing a fifth of its energy from renewables has already seen that target met and even passed in several EU member countries — in fact some by some estimates the entire area is well ahead of schedule in achieving this goal and is likely to be getting more than a third of its electricity from renewables by the end of the decade. The lion’s share of this is solar.

According to a United Nations report released in 2012, investment in solar energy leapt to $147 billion in 2011, a year to year increase of more than 50 per cent, and much of that was due to swelling demand for rooftop installation from Germany, Italy and Britain.

Smaller Central and Eastern European markets are also experiencing an uptick in adoption of solar technology due to government support. Ukraine provides a good example, with the stated intention of generating 30 per cent of its energy from renewable sources by the target date of 2015 — an ambition, which, if reached, will triple the level of 2010.

United States

Meanwhile, the uptake of solar capacity in the United States for the first three quarters of 2012 alone has already overtaken the corresponding total for 2011 in its entirety. Solar installations spiked by 44 per cent in the third quarter alone according to figures from the Solar Energy Industries Association (SEIA) and GTM Research. The US, not usually a prime market for solar, now has more than 5.9 gigawatts (GW) of solar PV generating electricity across the country and another 500 MW of concentrating solar; figures which bring the total number of households on the receiving end to about a million. The lion’s share of this growth (684 MW in the third quarter alone) can be attributed to small residential PV installation and on-site commercial systems. Expectations for Q4, unavailable as of this writing, are even higher, with more than 1.2 GW of PV forecast for installation next quarter as developers scrabble to meet year-end deadlines. Certainly Q4 historically provides the lion’s share of installations — in 2010 the figure for final quarter installations was 41 per cent, in 2011 the corresponding figure was slightly higher, at 42 per cent.  Should that trend be borne out in the final quarter of the current year, Q4 2012 would be the best quarter for the American solar PV market on record. “We expect to see the residential PV market post another record number in Q4,” says Shayle Kann, vice president of research at GTM, “as third party residential installers gain more traction in mature, cost-effective markets.”

Feed-in-tariffs

The influence of government policy cannot be understated, particularly in connection with feed-in-tariffs. The knock-on effect of both the provision and the revocation of this policy initiative becomes evident in short order.

According to the Bloomberg New Energy Finance’s Global Trends in Renewable Energy Investment 2011, the most recent figures available, Spain’s investment in renewables across the board dropped by more than half as the impact of governmental policy took hold. The policy changes, cuts to the solar feed-in-tariff, depressed the market even when word of them first appeared as rumour several months prior to introduction.

Conversely, as noted in the same report, the introduction of a feed-in-tariff scheme in the United Kingdom resulted in a spike in interest, accounting for 45MW of new solar capacity being installed between the introduction of the scheme in April and year’s end.

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