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Sunday, January 26, 2014

An evolutionary pattern: The shifting sands of solar demand

By Alice Lambe

 Europe has accounted for a large percentage of solar energy equipment  installations
The global solar energy market has expanded in recent years
There is no doubt about it, the nature of demand for solar energy is continuing to change with every single year.

While this has always been the case since its innovation, the last five years have seen a more fundamental shift in power in the global solar energy market. More specifically, Europe has begun to lose its prevailing reputation as the king of installations, as egalitarianism begins to impact on the market and diversify customer demographics.

Between 2006 and 2011, for example, Europe represented an estimated 70% of all global solar installations. In 2008 and 2010 specifically, the region compromised approximately 85% of installations, dominating the marketplace ahead of developing economies in alternative parts of the world.

Addressing current trends & recent market shifts

Nothing lasts forever, however, and subsidy reforms and high rates of market penetration have a detrimental impact on solar market growth throughout Europe. Conversely, other global regions have experienced a surge in demand for solar energy providers, as the market becomes increasingly diversified and influenced by worldwide socio-economic trends. With Europe's dominance of the sector now considered to be a thing of the past, countries in Asia, North America and to a lesser extent the Middle East have stepped forward to fill the void.

Taking Asia as an example, it is immediately obvious that the independent markets in China and Japan have benefited from considerable growth. As a result of this expansion, the Asia-Pacific region now contributes approximately half of all global installations, which is a far-cry from its previous share of just 10% in 2010. In fact, the continent of Europe only represented a third of the cumulative global market last year, and this is expected to decline to less than a quarter by the end of 2014.

While Asia may have already usurped Europe as the dominant market leader, North America is not far behind. With American citizens increasingly motivated by environmental goals and the desire to live more sustainable lives, it stands to reason that the U.S. should be an influential player in the worldwide solar industry over the course of the last eighteen months. In terms of the quickly developing Middle Eastern sector, Saudi Arabia is likely to lead the way amid a rising number of government backed solar incentives and initiatives.

The bottom line in global solar energy: A bright and increasingly diverse future

Given the shifts in market dynamics that have occurred during the last five years, it is likely that the industry will experience even more diversification between now and 2018. More specifically, while the Asia-Pacific region will continue to emerge as the dominant market player, the most significant rate of growth will be recorded in largely unsubsidised Latin American markets such as Mexico and Chile. Although the market in these regions will be relatively small in comparison with the industry leaders, they will attract larger developers and make more significant waves over time.

Aside from creating opportunities for industrial growth and expansion in both developed and developing economies, there are also considerable environmental benefits delivered by a diversified solar market. On a fundamental level, the rising level of demand for solar power reflects the changing attitude of home-owners and consumers from across the globe, as people strive to reduce their carbon footprint and identify a more sustainable way of living. When you also consider the cost-efficiency of solar panels, this drive is only likely to gather further momentum in the years that follow.

About the author: Alice Lambe is a solar energy specialist. When she’s not advising her clients on all things solar she contributes to renewableheating.org.

Image license: USAF, US-PDGov