LONDON Global installed solar photovoltaic power grew by 44 percent in 2009 on the back of German subsidies now under threat, the European Photovoltaic Industry Association said on Tuesday.
The global industry added a record 6.4 gigawatts new capacity, bringing total capacity to more than 20 gigawatts (GW), the EPIA said, despite tightened credit which has particularly hit infrastructure and energy project finance.
The increase was thanks to subsidies including a price premium for solar-powered electricity called a feed-in tariff.
"This is particularly impressive in light of the difficult financial and economical circumstances during the past year," said the EPIA industry group, adding it expected growth of at least 40 percent in 2010.
Germany was the largest demand market last year, adding 3 gigawatts (GW), followed by Italy, Japan and the United States. Germany would likely remain the biggest demand market in 2010, the EPIA said.
But Germany has proposed cuts to its feed-in tariffs from July, by 16 percent for rooftop solar power and by 15 percent for ground-mounted panels.
The risk from a cut in subsidies is underscored by Spain, which added just 60 megawatts (MW) in 2009, a fraction of the 2,500 MW or 2.5 GW the country added in 2008. The drop was a result of a cap in subsidies which Madrid applied because of a growing liability from its 25-year guaranteed incentives.
Despite strong growth, solar power still provides only about 0.5 percent of global installed electricity capacity, HSBC data show.
One problem for the emerging technology is cost, even in the aftermath of a sharp fall in solar panel prices, following a global glut of the main raw material, solar-grade silicon.
Solar power is far more expensive than rival forms of power generation, according to an HSBC report published in November.
Under the best case scenario in sunny locations, the cost of solar-powered electricity is about 17 U.S. cents per kilowatt hour (kWh), compared with about 15 cents for offshore wind, 7 cents for coal and nuclear and 6 cents for gas.