By Ardour Capital
On December 1, the House Select Committee on Energy Independence and Global Warming announced it will no longer exist when the next congressional session begins. The committee, which was established by Democrats in 2007 to study energy and climate issues, held over 50 sessions regarding environmental legislation.
Global Solar Demand in 2011
Based on solar installations year-to-date and changes to feed-in tariff (FIT) programs made or announced in the major PV markets, we are raising our estimates for 2010 and 2011. We believe global demand will continue to grow steadily in 2011, but well below the pace of 2010. Germany will still be the main player, but several countries (such as Italy, the US, and Japan) will be gigawatt markets next year.
- We increase our 2011 global installation forecast to 17 GW, and introduce our 2012 estimate of 20.3 GW.
- Europe is on track to double installations in 2010; demand should be flat in 2011.
- The North American market will more than double in 2011.
- Geographic diversification will come from Asia and several new markets.
- Given our 2011 growth projections and compelling valuations, we see attractive entry points for these solar stocks: First Solar (NASDAQ: FSLR), Trina Solar (NYSE: TSL), Power-One (NASDAQ: PWER) and Satcon (NASDAQ: SATC).
We believe the PV market will be up ~22% in 2011 (not nearly the 92% expected in 2010), and estimate 17 GW in global demand.
Volatility will likely be high over the next few months as several European countries revise subsidy programs. We expect demand from Europe to be flattish next year (10,400 MW vs 10,850 MW in 2010), while North America (2,400 MW) and all other markets (4,200 MW) should more than double 2010 estimates (1,100 MW and 1,950 MW, respectively). We believe similar growth will be sustained in 2012, and estimate a total of 20.3 GW to be installed, up ~19% on an annual basis.
Europe is on track to double installations in 2010, and we expect demand to remain flat in 2011. Most key European countries have announced or made cuts to their FIT; however, due to lower prices and demand elasticity, we expect the European market to remain at the same level as in 2010.
Declines in Germany (still the world's main market) and the Czech Republic (expected to slash both tariffs and size of the installations that can apply for them), will be offset by growing markets, such as Italy (a lucrative market, with plenty of annual sun-hours). Further growth, on a smaller scale, will come from France (which just announced a potential freeze on new projects), UK, Greece, and Bulgaria. Spain decided not to retroactively cut its 2008 tariffs, but a cap of ~500 MW/yr continues to curb this market.
