Solar slowdown in store?

Summary:After a banner 2011, new installations will decline dramatically until emerging markets start picking up the slack, according to a new report from Lux Research.

A sobering report out this week from Lux Research suggests the new solar energy installations will "grind to a near halt" as government subsidies lapse and equipment supplies reach a more reasonable balance with demand.

The report, "called Market Size Update 2012: The Push to a Post-Subsidy Solar Industry," said the solar industry is bracing for a double whammy in 2012: the actual and anticipated expiration of government incentives and subsidies in Europe and the United States, and lower component prices. That means not only will new installations be slower to take hold, equipment makers will get less margin from the installations that do get started.

Overall, Lux Research believes there will be about 0.4 gigawatts in new solar capacity installed in 2012. That compares with 26.5 gigawatts installed in 2011.

Ouch.

The good news for those of you in the solar business is that even though the United States political landscape likely will shift away from extraordinary renewable energy support in the coming months, emerging nations are getting with the program.

Lus Research believes that these markets will quadruple in size between 2012 and 2017. Among the regions to watch closely are South Asia, Africa and South America, the report suggested.

Although installations globally will tend to shrink in size, utility-scale solar projects will pick up in countries like China, the research firm said. This sector should grow from 6.3 gigawatts of generation capacity in 2011 to 13.8 gigawatts by 2017.

Private financing likely will pick up where government support disappears. For example, Lux Research expects more programs such as "renewable bonds" that have been tested in the state of New Jersey by Wells Fargo. It points to Citigroup as one financial services company that will likely lead the way.

Topics: China

About

Heather Clancy is an award-winning business journalist specializing in transformative technology and innovation. Her articles have appeared in Entrepreneur, Fortune Small Business, The International Herald Tribune and The New York Times. In a past corporate life, Heather was editor of Computer Reseller News. She started her journalism lif... Full Bio

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