Solar demand for 2012 reached just 29.0GW, an increase of only 5% on year compared to 27.7GW in 2011, according to Solarbuzz. This is the first time in a decade that on-year market growth in the solar industry has been less than 10%.
"During most of 2012, and also at the start of 2013, many in the solar industry were hoping that final solar demand figures for 2012 would exceed the 30GW level," explained Michael Barker, senior analyst at Solarbuzz. "Estimates during 2012 often exceeded 35GW as solar companies looked for positive signs that the supply and demand imbalance was being corrected and profit levels would be restored quickly. Ultimately, solar demand during 2012 fell well short of the 30GW mark."
Despite an environment of declining incentives during 2012, Europe remained the largest regional market with 16.48GW of solar demand, almost 60% of global demand last year, but less than 68% of the global demand in 2011 and 82% in 2010. The second largest region for solar demand was Asia with 8.69GW, stimulated by the growth of the China end-market during the second half of 2012.
Solar demand from the Americas is now segmented across North America (US and Canada), and the Latin America and Caribbean regions. The Americas provided 13% of global solar demand in 2012, or 3.68GW. However, a large portion of solar demand from the Americas came exclusively from California, driven by Renewable Portfolio Standards and rebates. In fact, California provided more than one-third of all solar demand from the entire Americas region during 2012.
Despite falling short of 30GW, solar demand during 2012 set another annual record for the industry. Indeed, the 29.0GW of demand added during 2012 is nearly 30% of all installed solar capacity at the end of 2012. However, the demand level of 29.0GW in 2012 should be compared directly to the level of supply that upstream manufacturers were expecting during the year.
"For supply and demand to have been balanced during 2012, end-market demand should have approached the 45GW level," added Barker. "This is 50% higher than actual solar demand in 2012, and reflects the lack of demand elasticity that characterizes the solar industry today. It also explains why even those companies that gained market-share in 2012 still ended up reporting significant operating losses."
Solarbuzz forecasts that the solar industry will see rapid globalization during 2013, incorporating growth from new regions including Latin America, the Middle East and Africa, and emerging Asia markets. However, uncertainties still exist in many of these regions that will impact on the rate of adoption of renewables and exactly how much solar PV installations will be added during 2013.
"The role of emerging regions will be pivotal to solar industry supply and demand during 2013 and will offer a leading indicator for how quickly the industry can exceed the 30GW annual run-rate level," concluded Barker.
