China only had 893 MW of solar installed capacity at the end of 2010 and is expected to have gained an additional 1.7 GW in 2011, becoming one of the top four PV markets after occupying seventh place in 2010. The country is expected to surpass the US in 2012 to become third largest PV market in the world, based on annual installed capacity. According to the 12th five year plan, the targets for solar installed capacity are expected to be set at 15 GW by 2015 and 50 GW by 2020. Under the plan, China is promoting the development of smaller-scale distributed solar projects in populated areas. This will attract private small and medium enterprises to the installation market, as large players will focus upon bigger projects.
The US wind market witnessed a 31% increase and installed 6,810 MW in 2011. As shown in the graph below, capacity additions in the last quarter were quite high, a trend which has been consistent for quite some time now. California, Illinois and Iowa were the top states in capacity additions in 2011. There are around 8,300 MW of wind projects that are currently under production. In 2012, the installations are expected to be higher. The country is expected to add around 8.8 GW in 2012. Current growth is largely driven by PTC benefit, but this is set to expire at the end of 2012.
Moreover, federal-level RPS looks a remote possibility as of now. It is expected that any encouraging developments in policy front may only happen after second half of 2013. Under these circumstances, annual installations in 2013 will see a sharp dip. The following chart depicts the impact of PTC expiration on annual wind capacity. As quite evident from the chart, PTC has played an important role in the development of the industry and its expiry will be deterrent to the growth of the industry.
Policy uncertainty and lack of financing are the major challenges the industry is facing. Most of the renewable energy developments are either driven by state renewable energy mandates or the American Recovery and
2.3 France Hydro Concession Renewal to See Entry of New Players
In another development, China also announced the introduction of FITs in August 2011, which set the minimum prices grid operators must pay at 15 cents/kWh. This is also expected to be paired with the clean energy quotas to be maintained by grid operators, and is aimed at guaranteeing market demand for the solar power produced. Installation growth may also be positive for the domestic companies facing issues related to weakened demand in Europe and over capacity build-up. Stock prices of Chinese solar companies, like those of their peers, have plummeted in the last four to five months. However, strong growth in domestic installations may bring something to cheer about for the Chinese solar companies.
2.2 Surge in the US Wind Installations Due to the Expiry of Production Tax Credit (PTC)
Reinvestment Act (ARRA). However, treasury grants expired in December 2011 and PTC is set to expire by December 2012. The lack of political consensus suggests that it is highly unlikely that PTC will be extended.
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The renewal of operation concessions for hydroelectric plants has been an important concern in the European electricity market. Operation concessions are traditionally managed by state-owned electricity companies, and are governed by rigid legal systems that can lack transparency. Many national markets in Europe show a dominance of state-owned utilities in the electricity industry, which impedes the development of effective competition. In the recent past, the European Union (EU) has adopted some measures to ensure that concession renewal process facilitates transparency and should be done through competitive bidding. The European Commission (EC) has challenged the concession renewal approach of France and Italy, where the preference was given to existing license holders when renewing the concessions. There are number of hydro plants coming up for renewal in France. It is expected that they will follow
EQ INTERNATIONAL January/February 12
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