With European PV end-markets subject to considerable policy-related uncertainty during 2012, PV manufacturers are now targeting emerging Asian economies in an attempt to both minimize the risk of negative demand growth in Europe and to provide a broader range of sales channels moving forward.
While established PV policies – implemented within China, India, Thailand, and Malaysia – have been instrumental in seeding new growth across the Asia Pacific region, further incentive schemes are also likely to emerge soon from countries such as the Philippines and Indonesia.
Despite potentially lower return-on-investment and greater barriers-to-entry than established PV-intensive countries, the collective opportunity from the developing PV markets across Asia is now being factored into the strategic marketing plans of leading PV manufacturers.
Indeed, according to our Asia Pacific PV Markets Quarterly report, the PV project pipeline within emerging Asian markets has now grown to the 4-GW-level.
Despite limited traction from its PV incentive program established back in 2002, Thailand is now offering significantly improved downstream economics – stimulated by the extension of payment terms to a ten year period from the previous seven, coupled with the collapse in module ASPs that characterized the PV industry during the past 12 months.
In fact, during 2011, these attractive project returns stimulated a considerable increase in PV applications in Thailand – forcing the government to subsequently suspend new project applications. At the end of March 2012, Thailand is comprised of 2.3 GW of project applications, with more than 700 MW signed into PPA. As a result, policy makers have reacted by increasing the country’s PV target for 2020 from 500 MW to 2 GW.
In Malaysia, a newly introduced FIT is set to drive strong PV demand also. Historically dominated by off-grid PV applications, Malaysia’s new PV program has the potential to offer return-on-investments that may rival those offered across some of the European counties. While initial project applications are limited in number, the new policy should nonetheless been seen as a positive step in developing Malaysia’s untapped potential for PV deployment.
With plans to install as much as 70 GW by 2020, China and India are now emerging as leading drivers of PV demand. However, reaching these targets presents several challenges. For example, project developers will be required to overcome significant issues such as transmission infrastructure.
However, if they are able to successfully achieve their installation targets, India and China might serve as a case-study for other developing countries wishing to increase their percentage of PV generation.
Current PV project pipeline across India, China, Thailand and Malaysia reach 3.8 GW at the end of March:
Source: Solarbuzz Q1’12 Asia Pacific PV Markets Quarterly