Frost & Sullivan: The US and China Threaten the European Solar Supremacy

LONDON, May 11 /PRNewswire/ -- Increased competition and the global economic
crisis have cast clouds upon the Western European solar energy market. Falling
polysilicon and solar module prices have the potential to cement China's role
as a solar manufacturing hub. In terms of installed capacity, the United
States is playing a greater role as more and more states are putting the
renewable energy standards into existence. Despite these market developments
and the current economic crisis, the future of Europe's solar energy market
continues to appear bright as new emerging markets within Europe may turn into
strong performers.

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Europe and Japan were the original trailblazers of the solar energy industry;
thus they have historically held the strongest positions. Europe,
specifically Germany, has been by far the most important player and
manufacturing hub in the global solar market. Its position has recently
started to weaken as other countries have been gaining a stronger momentum in
the solar energy business.

The European market is now facing two major competitors. The Chinese industry
is forcing the rest of the world to reduce manufacturing costs as they are in
a position to manufacture solar modules at the lowest cost. The US, having
adopted a pledge for energy independence, which increased political support
for renewable energy, is giving a boost to its solar energy industry.

"When solar cell and module manufacturing come into play, Asian producers have
been on the aggressive expansion curve eating into Japanese and European
manufacturer's market shares. Low costs and increasing technological acumen
will help them further expand their presence in the global solar markets,"
says Frost & Sullivan Green Energy Research Manager Alina Bakhareva. "The US,
having utilised only a fraction of its immense solar potential, has all
ingredients to breed a strong and well-diversified solar market."

In spite of these new competitors' entrance onto the global playing field,
Europe is expected to retain a strong portion of the market share. The region
stands out on a global solar landscape as one of few that have been
successfully developing the three major components needed to build a
well-rounded domestic solar industry: research, a strong manufacturing base,
and government support.

"Given the difficult macro-economic situation globally, tight credit markets,
and reducing level of government support in comparison with 2008, the retail
and residential solar markets may suffer the most with the demand taking a
plunge on low consumer confidence and unwillingness to spend," continues
Bakhareva. "The large-scale projects with secured finances are likely to go
ahead, while new ones may struggle to attract investment at a reasonable cost
in the near term. In these turbulent economic times, a shakeout will make the
industry stronger by leaving only players that are able to offer the best
products at best prices. A harsh truth for many smaller European
manufacturers is that they are likely to fall prey to the globalisation of the
solar industry as companies with stronger balance sheets begin to acquire
their less fortunate counterparts. Despite the big challenges ahead, the
long-term sentiment towards renewable energy, and the solar industry in
particular, remains optimistic."

In regard to individual markets, the German solar power industry continues to
be one of the European market's strongest sectors. The retail segment is
currently suffering due to lack of consumer confidence and unwillingness to
spend. Commercial scale projects, however, offer a ray of sunlight amidst the
gathering clouds. Many major manufacturers have made announcements to
increase capacity or build new plants, and the construction has begun for
Germany's largest solar PV station with 63 MW of installed capacity.

France has been traditionally in favour of Building Integrated Photovoltaic
(BIPV) technologies, an application which enjoys the highest tariff of up to
euro 0.55/kWh. "While the country has shown quite reasonable growth rates
over last five years," adds Bakhareva, "the overall feeling is that solar
market would have developed to a greater extent if the policy had been equal
to various types of installations."

Since enacting a new feed-in tariff in spring 2007, Spain has turned into a
vital source of demand for solar markets worldwide. Developers rushed to
install as many systems as possible before September 2008 to take advantage of
a generous feed-in tariff of euro 0.42 per kWh, which led to the government
being swamped with applications, causing severe delays. After approving 392
projects, the government capped installations and lowered tariffs. As a
result, the 2009 newly installed capacity has a very slim chance of matching
that of 2008.

Italy and Greece have the potential to become successful emerging markets due
to attractive tariffs, but administrative barriers cause them to remain a
sleeping giant.

Another emerging market, the Czech Republic, kick-started its solar power
industry in 2007 by installing 4.5MM of solar power. The Czech Republic may
turn into one of the strongest performers in 2009 in terms of growth rates.

For more details on the Solar Energy Market, please email Chiara Carella at
chiara.carella@frost.com with the following information: your full name,
company name, title, telephone number, e-mail, address, city, and country.

GIL 2009: Europe
Frost & Sullivan has expanded its flagship Global Congress on Corporate Growth
- GIL Global - into several major cities around the world including London.
For the first time ever in Europe, Frost & Sullivan will be hosting the
Growth, Innovation and Leadership Congress 'GIL 2009: Europe' on 19-20 May, at
the Sofitel St James in London. GIL Global is the industry's only event
designed to support senior executives in their efforts to achieve sustainable,
top-line growth. To register, obtain a programme agenda, explore sponsorship
opportunities, or attend as a member of the media for 'GIL 2009: Europe',
please contact Chiara Carella, Head of Corporate Communications for Frost &
Sullivan in Europe, at chiara.carella@frost.com. One-on-One interviews with
Frost & Sullivan senior growth consultants are also being scheduled. For more
information you can also visit www.frost.com/giluk

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Contact:
Chiara Carella
Head of Corporate Communications
P: 0044 (0) 207 3438314
E: chiara.carella@frost.com
http://www.frost.com

SOURCE Frost & Sullivan

Chiara Carella, Head of Corporate Communications of Frost & Sullivan, 0044 (0)
207 3438314, chiara.carella@frost.com