APAC 'bright spot' in gloomy solar industry

Summary:Region's rapid growth and untapped market potential helping industry tide over overcapacity issues, inconsistent regulations and transition to "post-subsidy" environment, market observers say.

The rapid growth of solar technology in key Asia-Pacific markets such as China, Japan and India has been instrumental in helping the overall industry overcome the ongoing transition toward less government subsidies and oversupply, say observers.

Christopher Sunsong, analyst at NPD Solarbuzz, pointed out that Europe, in general, is currently in the process of reducing subsidies for photovoltaics (PV) manufacturing and controlling annual installations. Additionally, there is still a lot of overcapacity across the supply chain, which is putting a lot of strain on manufacturers' margins, he noted.

A ZDNet Asia report last August also noted the oversupply issue, citing industry reports from Lux Research and Navigant Consulting which showed that while more solar power cells are being installed and prices of these modules are falling, revenue for manufacturers is projected to be flat until 2016. These figures highlighted the brutal price competition among PV makers in which rivals continually shaved down the price per watt amid worries whether demand was strong enough to absorb the rising manufacturing capacity, it stated.

Tapping sunbelt countries' potential
This is why regional markets such as China, Japan and India will be key this year, said Sunsong. The growth in China and India is particularly encouraging as these two nations alone aim to install a combined 70 gigawatts (GWs) of solar capacity by 2020. Additionally, there's been "a lot of growth and new markets" opening up in Thailand, Malaysia, Philippines and Indonesia, he added.

"Asia-Pacific is really a bright spot in the industry right now…and the rapid growth has really been instrumental in helping to offset the decline [in other markets]," the analyst pointed out.

Matt Daly, general manager of REC Solar Asia-Pacific, agreed with the region's importance. He noted that countries such as Indonesia, Philippines, Thailand, India, Bangladesh, and Pakistan, have huge areas with energy deficiencies and solar power can be used to plug these gaps.

Solar power, he pointed out, can be produced in these places when needed, either as a primary source or easing the load off the main power grid during peak periods while contributing to the global pool of solar energy.

As for outlying cities and islands in Southeast Asia, many of which are dependent on diesel to generate electricity and are facing rising costs in transporting the fuel, solar provides a more efficient and sustainable source of energy, he added.

"If we were to successfully leverage the high insolation levels available in Asia-Pacific, the PV potential of sunbelt countries would amount to a significant contribution to satisfy power demand, both in the region and globally," said Daly.

In terms of which Asian countries are the big adopters of solar technology, the REC executive pointed to Australia and Japan where their rapid and continuous adoption of solar is driven by strong government support, a large base of certified installers and a keen understanding by the general populace of the benefits of investing in solar initiatives.

Sunsong noted that recent policy changes have negatively impacted the growth rates of more mature markets such as Australia and South Korea, though.

Government support integral
The regulatory climate was something Daly singled out, saying that "more consistent and stable government policies and regulations" would be welcome as these would boost adoption of solar initiatives within the region.

He noted that governments here need to develop ongoing, sustainable support policies and incentives such as efficient and effective licensing procedures that reduce the transaction costs needed to make solar PV cells available. This, in turn, will benefit consumers, he added.

The Singapore government's decision to establish a specialized project financing company (PFC) in its 2012 budget, for example, is a "move in the right direction", stated the REC executive. This is because solar farms and large-scale commercial projects require financial assistance and bank guarantees, and closer collaboration with the financial and investment community to develop the necessary infrastructure for financing solar projects will be necessary for greater adoption across Asia, he explained.

Measures such as eliminating subsidies for retail electricity prices and greater deregulation of energy markets in the region will also allow solar power to better compete with grid prices sooner, Sunsong pointed out.

"At that point, innovative financing and leasing models will allow consumers to purchase PV at lower rates than from the grid, thus spurring demand without requiring government subsidies," he said.

Daly also called for more initiatives to increase education and awareness of the benefits, competitive advantages and opportunities that solar technology offers. One example is the annual Singapore International Energy Week, which is a platform for energy professionals, policy makers and commentators to discuss and share best practices and new innovations as well as exchange ideas.

"Such exchanges also increase the visibility of photovoltaics with international development banks and agencies, which may further increase investments in Asia-Pacific," he said.

Topics: CXO, Emerging Tech

About

A Singapore-based freelance IT writer, Kevin made the move from custom publishing focusing on travel and lifestyle to the ever-changing, jargon-filled world of IT and biz tech reporting, and considered this somewhat a leap of faith. Since then, he has covered a myriad of beats including security, mobile communications, and cloud computing... Full Bio

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