Solar Power Experiences Strongest Year of Growth Yet

by Yingling Liu / June 18, 2009

The year 2008 saw the most phenomenal growth in the solar power market yet, with dramatic increases in installations of solar photovoltaics (PVs), which generate electricity directly from sunlight, and solar thermal plants, which use the sun's heat to produce power. Newly added PV power installations amounted to 5,600 megawatts (MW), more than double the 2,400 MW installed in 2007.¹ Cumulative PV power installed worldwide jumped from 9,000 MW in 2007 to almost 15,000 MW in 2008.²

Europe remains the leading market for PVs, accounting for over 80 percent of world demand in 2008.³ (See Figure 1.) Spain overtook Germany to become the number one solar PV market worldwide, with its market increasing in one year from 560 MW to an estimated 2,600 MW in 2008.⁴ This 364-percent growth accounted for almost half of all new installations in 2008.⁵ Germany followed in second place, with new installations of about 1,500 MW.⁶ The United States came in a distant third, adding approximately 348 MW, followed closely by Italy, South Korea, and Japan.⁷

Europe leads in the cumulative PV installed capacity too, with more than 9,000 MW in operation, representing over 65 percent of the global total at the end of 2008.⁸ Japan and the United States are following far behind, accounting respectively for 15 percent and 8 percent of the global total.⁹

The phenomenal growth in the top two national PV markets—Spain and Germany—suggests that government support programs are pivotal in the development of the solar market.¹⁰ A feed-in tariff policy in Spain requires utilities to buy electricity generated from solar power projects at premium guaranteed long-term prices that are set by the government, an incentive introduced to encourage the adoption of renewable energy. The lucrative solar electricity rates in Spain fanned unexpected enthusiasm from the industry. In September 2008 the government reduced the payments under the feed-in tariff by a great margin and put a cap on annual PV installation from 2009 through 2010, aiming at a target of 3,000 MW by the end of 2010.¹¹ The anticipated decline in the solar electricity rates galvanized the private sector to rush to install new solar PV capacity before these changes came into force.¹² This policy change is expected to slow the PV market in Spain significantly over the next few years.