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unLOCKInG THESunbeltPotential of PhotovoltaicS
Seco eitio Octoe 2010
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FOREWORD
The European Photovoltaic Industry Association (EPIA) is delighted to present Unlocking the
Sunbelt Potential o Photovoltaics, a study that was carried in 2010 by EPIA with the collabora-
tion o the Strategy Consulting irm A.T. Kearney.
We would like to warmly thank Mr. E. Macias, President o the Alliance or Rural Electriication,
who has irst established the concept o this important research, as well as A.T. Kearney or thequality o their contribution as well as the complete EPIA team or steering works and delivering
this study.
We also thank ASIF, the Spanish PV association and ARE, the Alliance or Rural Electriication
who supported the initial phases o this study.
This study is o considerable importance as it highlights, with demonstrated acts and igures,
the immense competitive potential o PV in high irradiation countries, where it increasingly con-
stitutes a clean, sustainable and competitive alternative to conventional uels.
The study urthermore analyses conditions and explores various possible scenarios under which
ull PV potential o Sunbelt Countries could be unlocked.
With its unique undamentals, PV is poised to become a mainstream electricity source able to
sustainably meet the soaring electricity demand o growing economies in the Sunbelt region
and elsewhere in the World
It is now our collective mission to unlock the potential o PV and deliver the promises o a demo-
cratic, responsible and sustainable energy uture.
A. El Gammal
Secretary General
Autors :
A.T. Kearney : Jochen Hau, Marnik Verdonck, Harold Derveaux, Laurent Dumarest, Jose Alberich
and Jean-Charles Malherbe
EPIA : Adel El Gammal, Paula Llamas and Gatan Masson
ARE : Ernesto Macas
Second edition Publication date : October 2010
Cover pictures courtesy o Concentrix, First Solar and Isooton
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ExECuTIvE Summary ExECuTIvE Summary 5
TABLE OF CONTENTS
1 Executive summary 4
2 The Sunbelt vision or PV 6
2.1 The overall Sunbelt PV opportunity 6
2.2 Competitiveness o PV 13
2.3 Key pre-conditions to realise the Sunbelt PV potential 17
3 Selected regional perspectives on PV 22
3.1 Mediterranean and Northern Arica 24
3.2 South East Asia 29
3.3 China and India 32
3.4 Latin America 37
4 Recommendations to key stakeholders to unlock the Sunbelt potential 40
5 How EPIA will help make the Sunbelt vision happen 42
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ExECuTIvE Summary ExECuTIvE Summary 7
1ExECuTivE SummARyPhotovoltaic (PV) development is booming. With more than 7,000 MW added to the
global generation base in 2009, the cumulated installed base is now well over 22 GW.
Somewhat paradoxically, however, this growth is mainly driven by countries outside theworlds Sunbelt; in act the growth o PV could be accelerated tremendously, i the worlds
Sunbelt PV potential would be unlocked.
Doing so would bring enormous benets to the Sunbelt countries. PV can contribute
signicantly to cover the dynamically increasing electricity demand o these growing
economies by harnessing low-carbon, ree and domestic energy sources - thus
decreasing dependencies on (imported) ossil uels, reducing pressures on water use
and improving the carbon balance.
This report presents ndings regarding possible scenarios under which the Sunbelt
PV potential could be unlocked, namely, the Base, the Accelerated and the Paradigm
shit. The study urther examines the countries which might be irst in line to do so,
given the attractiveness o PV or their economies and the overall investment climate
they oer. The result is graphically summarised in Figure 1, showing PV potential o 66
Sunbelt countries that jointly constitute one large Sunbelt PV potential. This underlines
two main messages : while PV potential diers depending on country size and suitability,
there is signicant potential in every country o the Sunbelt. And jointly, the PV potential
o Sunbelt countries amounts to a major contribution to satisy power demand and
decrease the worlds dependency on conventional uel sources.
Summary ndings :
Under an Accelerated scenario, these countries would reach an installed PV ca-
pacity o around 405 GW by 2030, which would provide sustainable electricity
supply to about 300 million people and make up between 2.5% and 6% o the
Sunbelts overall power generation.
Under an ambitious Paradigm Shit scenario, the Sunbelt countries could even reach
about 1,100 GW, representing up to 12% o power generation in some geographies
by 2030.
In many regions, PV already constitutes a competitive orm o peak power supply. This
is true in particular when replacing diesel-red peak power in distributed generators.
By 2020, PV can reach LCOE (Levelised Cost o Energy) o 5-12 cts/kWh in Sunbelt
countries. It would then likely be more competitive than gas or oil uelled peak power
plants.
As cost will drop to 4-8 cts/KWh by 2030, PV will be competitive with all orms o coal
and gas-red mid-load plants, even i assuming only modest uel price increases.
Key preconditions :
To enable realisation o the PV potential put orward in the dierent scenarios, decision-
makers in Sunbelt countries (such as governments and utilities) must consciously
include PV as an explicit part o their energy vision and investment planning.
Power utilities in particular need to utilise the strengths o PV to increase peak capacity
and strengthen the resilience o grids by distributed generation assets. At the same
time, the opportunity to leaprog expensive grid development by deploying PV and
other renewables must be ully leveraged.
To acilitate political support, the PV industry needs to increase its commitment to
contribute signiicantly to domestic economic value generation, e.g. by means o
investment in manuacturing capacity and establishment o local service oerings. This
implies increased levels o collaboration to open markets or PV deployment.
Development banks and private inancial intermediaries need to actively address
the nance gap that exists in many Sunbelt countries. Transerring experience rom
established PV markets and collaborating closely with governments and PV industry is
key to acilitate project nancing.
EPIAs role :
As an active contributor to unlocking the PV potential in the Sunbelt countries, EPIA will :
Build awareness and know-how in key Sunbelt countries on the benets o PV as well
as on sustainable support policies.
Facilitate PV industry collaboration on opening key Sunbelt markets.
Improve the visibility and image o PV with international development banks and agencies
with particular ocus on grid-connected PV.
Liaise with nancial institutions worldwide to prepare region / country specic nancing
solutions or PV investment in Sunbelt countries.
Encourage PV companies and institutions rom Sunbelt countries to increase inormation
fow and enable close interaction among sector players.
Support the strengthening/creation o national PV associations in emerging Sunbelt
PV markets.
Elaborate market development roadmaps or selected Sunbelt countries.
Figure 1 : Sunbelt PV potential
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THE SunbELT vISIOn fOr Pv 9THE SunbELT vISIOn fOr Pv
2.1 The overall Sunbelt PV opportunity
Power generation rom PV has reached over 20 TWh in 2009, with over 22 GW o PVcapacity installed globally1. The tremendous growth over the past years was driven by
steep cost and price reductions, as well as signicant policy support in a number o
key markets. However, it must be noted that the growth occurred primarily in regions o
relatively modest solar irradiation : 9 out o the top 10 PV markets are located outside the
worlds Sunbelt.
This is despite the much higher solar irradiation o Sunbelt countries (Figure 2, let), which
make up only 9% o installed capacity today (Figure 2, right). Hence, rom a physical point
o view, the high solar potential o Sunbelt countries remains largely untapped.
At the same time, expected electricity demand growth in the Sunbelt is much higher than
in non-sunbelt countries; according to the IEA World Energy Outlook, almost 80% o
the expected global el ectricity demand growth will come rom Sunbelt countries2.
In addition to a contribution to meeting growing electricity demand, PV can provide
the solution to many additional energy challenges in Sunbelt countries (Figure 3). These
range rom a reduction o import dependency, to the contribution to economic and
social development resulting rom electrication o the country by using highly versatile PV
adapted to local needs. Electricity access is a key to poverty alleviation and t hus acili tates
the achievement o the Millennium Development Goals.3
Full realisation o these benets is currently hampered by a number o barriers that are the
reality in many Sunbelt markets. Subsidised uel prices, limited ability to serve the marketand a low level o awareness among power utilities are some o the most important.
Together, the untapped solar potential, rapidly increasing electricity demand and
signicant additional PV benets clearly underline the relevance o this report - Unlocking
the PV potential o Sunbelt countries would be very benecial to all stakeholders.
Figure 2 : Comparison o solar irradiation, share in electricity demand and cumulative
installed PV capacity
(1) For systems larger than 1 MWp; 85% perormance ratio
(2) Cumulative installed capacity 2009
(3) Electricity demand 2007
Source : NASA, IEA Technology Roadmap Solar photovoltaic energy, EPIA Global Market Outlook or Photovoltaics
until 2014, A.T. Kearney analysis
Average irraiatio Subet
Brai
Egpt
Cie
Sout Arica
Iia
Cia
Austraia
Ioesia
Gera
Uite States
Begiu
Japa
Cec Repubic
Sout Korea
Frace
Spai
Ita
Top 10 PV arkets 2009 Seecte coutries i SubetOperatigours(2)
KW/KWp
Cia
2,000
1,600
1,200
800
IRRAdIATIOn SUnBElT VS. TOP 10 PV mARKETS 2009 (1)
Electricitydemand
39%
61%
17.900 TWNon-Sunbeltcountries
Countriesin Sunbelt
Cumulativeinstalled PV
capacity
9%
91%
23 GWp
ShARE SUnBElT InElECTRICITy dEmAnd(3)
And GlOBAl CUmUlATIVEInSTAllEd PV CAPACITy
(TWh, GWp)
1 Compare EPIA Photovoltaic Market Outlook until 2014 at www.epia.org
2 IEA World Energy Outlook 2009
3 In September 2000, the United Nations adopted the Millennium Development Goals (MDGs) which range rom halvingextreme poverty to halting the spread o HIV/AIDS and providing universal primary education, all by the target date o 2015http://www.undp.org/mdg/
2ThE SuNBELT viSiON FOR Pv
Figure 3 :Benefts o PV or Sunbelt countries
Source : IEA Wor ld Energy Outlook; A.T. Kearney analysis
EnERGy ChAllEnGES FORSUnBElT COUnTRIES
KEy BEnEFITS OF PV AddRESSInGThESE ChAllEnGES
Electricity consumption orecast to grow by
~150% within the next 20 years in Sunbelt
countries
Electricity inrastructure is oten poor and1.5 billion people have no access to
electricity which hampers economic and
social development
Many countries have a high dependency on
imported uels or electricity generation
Large investments in generation and systeminrastructure are needed to meet surging
electricity demand
Pressure on Sunbelt countries to increasepower generation while keeping CO
2
emissions and other environmental impacts
to a minimum
>PV taps into unlimited, indigenous energy
supply and can make a sizeable contribution
to meet rising power demand
>PV generates power close to consumption,thus supporting strained grids or enabling
local mini grids. It can be combined well with
other renewable or conventional technologies.
PV can thus accelerate electrication and
stimulate economic activity, while reducing
import reliance
>High irradiation levels make PV already com-
petitive compared to diesel generators. In the
uture, PV will be highly competitive
to all alternatives. Directing investment into
PV now provides a long term source o
energy with low operational cost and enables
domestic industry build up
>PV is a low carbon technology and has anenergy packback time o 10-20 months.
It doesnt need water to operate and has no
adverse impacts on local air quality
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THE SunbELT vISIOn fOr Pv 11THE SunbELT vISIOn fOr Pv
The summary result o the PV Opportunity assessment is displayed in Figure 5. Here
Sunbelt countries are mapped according to the general country investment attractiveness
and the attractiveness o PV or a country. The resulting PV Opportunity mapping shows
the contribution PV can make to a country combined with the countrys likely ability to
make use o PV based on its overall investment climate. The PV Opportunity should not
be conused with the size o the PV market, although there is a certain correlation as theurther discussion will show. This refects the general thrust o this report, which is not
primarily to provide market intelligence to investors in PV, but to point out the contribution
PV can make to Sunbelt countries energy supply as well as providing guidance on
how the existing barriers can be overcome.
A total o 66 Sunbelt countries4 are analysed in this report, which are highlighted in
Figure 4. These countries with their 5 billion inhabitants represent ~95% o the Sunbelt and
~ 75% o world population. Countries in scope accounted or a GDP o 15.7 trillion USD
and consumed roughly 6,800 TWh o electricity, representing 97% o electricity demand
o all countries located in the Sunbelt. These 66 countries in scope are reerred to when
mentioning Sunbelt countries.
Figure 4 : Sunbelt countries in scope o study
Countries inscope o study
0
35n
35S
Sunbelt
Sunbelt countriesin scope
All countriesin Sunbelt
World
# countries(2008)
66 148 201
Population(2008)
5.0 billion 5.3 billion 6.7 billion
GDP (2008) 15.7 trillion 16.4 trillion 60.0 trillion
Electricityconsumption
(2007)6,800 TWh 7,000 TWh 17,900 TWh
Source : Wor ld Bank, IMF, A.T. Kearney analys is
Sigifcace o Subet Coutries
The 66 Sunbelt countries analyzed in the study account or 5 billion
inhabitants representing respectively 95% o the Sunbelt and 75% o
the worlds population.
Their 6.800 T Wh electricity consumption represents respectively 97%
o th e Sunbelt and 38% o the worlds electricity consumption.
4 Full list included in the Appendix
The analysis show a high level o PV attractiveness or many countries along varying
degrees o country investment attractiveness. In the top cluster, key countries rom
various continents such as China, India, Australia and Mexico are included, underlining
the global range o the PV Opportunity and representing some o the largest economies
in scope. The second and third tiers mostly include a number o middle sized countries
with dynamically growing economies such as Turkey, Argentina, South Arica, Saudi
Arabia, Egypt and Thailand, while the ourth and th tiers consist mostly o developing
countries like Kenya, Vietnam, the Philippines, as well as countries with higher political
risk such as Angola, Yemen and Lebanon.
The ollowing criteria were taken into account to assess country investment attractiveness :
Overall market potential measured as size o GDP,
Political and business environment,
Financial stability, Policies on renewable energy.
The attractiveness o PV or a country is largely independent o the countrys political
and business environment and takes into account the ollowing criteria :
Size o electricity market,
Projectedelectricity consumption growth (2007 2030),
PV cost competitiveness (irradiation, cost o existing energy sources),
Power distribution / transmission losses,
Flexibility o current generation mix to accommodate increasing penetration
o intermittent electricity sources such as PV,
Coverage o electricity network (electrication rate).
Figure 5 :PV Opportunity mapping o Sunbelt countries
RESUlTS OF ThE PV OPPORTUnITy mAPPInG (1)
IncreasingPVOpportunity
High
HighLow Country investment attractiveness
PVattractivenessforcountry
Yemen Republic
Namibia
Tanzania
ColombiaQatar
Morocco
TunisiaAlgeria
United Arab Emirates
CostaRicaNepal
SenegalJamaica
EcuadorGuatemala
Pakistan
SaudiArabia
Mexico
Malaysia
Chile
South Africa
Israel
Botswana
Australia
Singapore
China
IndonesiaKuwait
Bangladesh
Vietnam
LibyaKenya
CameroonMozambique
SriLanka
Jordan
Egypt,Arab Republic
Cambodia
Iran,Islamic Republic
BrazilThailand
Argentina
Turkey
Ghana
Peru
Zambia
EthiopiaNigeria
DominicanRepublic
Philippines
India
Syrian Arab Republic
Angola
Venezuela,RB
Lebanon
(1) Following countries are not shown on the mapping due to poor availability o data :
Chad, Cte dIvoire, Congo Dem Rep, Cuba, Iraq, Madagascar, Mali, Myanmar, Somalia, Sudan, Uganda
Source : NASA, IEA Technology Roadmap, EPIA Global Market Outlook or Photovol taics unti l 2014,
A.T. Kearney analysis
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THE SunbELT vISIOn fOr Pv 13THE SunbELT vISIOn fOr Pv
(1) Outlook or non-Sunbelt countries is based on Greenpeace Solar Generation 2010; Base/Accelerate growth
scenario is based on respectively the moderate/advanced scenario. Outlook or non-Sunbelt countries in
Paradigm shit is the same as used in the Accelerated growth scenario
Source : Greenpeace Solar Generation, IEA Technology Roadmap Solar photovoltaic energy, A.T.
Kearney analysis
Data or the clustering has been sourced rom primarily public databases rom the World
Bank, the International Energy Agency and the World Economic Forum. Data usually
refected 2008 status with 2007 used where 2008 data were not available yet. Where
necessary, A.T. Kearney supplemented and/or calculated indicators.
Based on the PV Opportunity clustering, Figure 6 presents scenarios o PV potential or
Sunbelt countries.
Behind these scenarios lies the assumption that the share o PV in a countrys electricity
consumption is a unction o the positioning o a particular country in the PV Opportunity
mapping, i.e. is strongly infuenced by both the relative attractiveness o PV or a country
and a given countrys investment climate.
Figure 6 :PV potential scenarios or the Sunbelt
1 130 GW
257 GW
405 GW
Basescenario
2005
0
200
400
600
800
1 000
1 200
20202010 20252015 2030
Accelerated growth scenario
Paradigm Shit
42%
67%
73%
58% 1,948 GW
33% 1,223 GW
27% 953 GW
Non-Sunbelt(1)countries
Paradigm Shit
Accelerated growth scenario
Base scenario
Countries inSunbelt
SCEnARIOS InSTAllEd PV CAPACITyIn SUnBElT COUnTRIES UnTIl 2030 (GWp)
ShARE OF SUnBElT COUnTRIES In GlOBAl
CUmUlATIVE InSTAllEd PV CAPACITy By 2030 (GWp)
PV Potetia i Subet Coutries
Depending on the development scenario, PV potential in Sunbe lt countries could
range rom 60 to 250 GWp by 2020, and rom 260 to as much as 1.100 GWp
by 2030.
Sunbelt countries would then represent 27% to 58% o the orecasted globalPV installed capacity by 2030.
The percentage shares o PV in electricity consumption used as assumptions or the
dierent scenarios were derived rom previous studies, showing technical easibility, such
as grid absorption o shares o up to 4-6% and the preconditions or reaching a Paradigm
Shit level o up to 12%5. The assumptions or the Base and Accelerated scenarios are
consistent with the methodology used in the EPIA / Greenpeace Solar Generation
Studies6, while the Paradigm Shit scenario is to be seen as a visionary stretch scenario
o what would be easible i a number o stakeholders collaborated closely and decisively
to realise the preconditions required to make the Paradigm Shit a reality.
The methodology applied thus represents a top-down approach, applying specic PV
electricity share assumptions or each cluster o PV Opportunity as deined above.
Please reer to the methodology appendix or details on the exact shares applied.
Due to the high level o uncertainty and undamental dierence o Chinas development,
a dierent methodology was used to relect the PV potential or China. It takes into
account the somewhat digital nature o the Chinese market growth. Hence, the Base
and Accelerated scenarios include a relatively low assumption o a 0.7- 1% market share
o PV in China by 2020, reaching 2-3% by 2030. This refects a continuation o the current
reluctant approach by the central governments policy makers or some time, ollowedby an accelerated development between 2020 and 2030 when LCOE are well below
current levels. The Paradigm Shit scenario, however, assumes that China will change
course soon and decide to unleash the ull potential o PV to reach a 4% share in power
generation by 2020 and 12% in 2030. Such a Paradigm Shit development would be
ully consistent with Chinas positioning in the PV Opportunity mapping and would make
China the dominant PV market in the next 20 years.
Figure 7 breaks down the overall scenario igures or the Paradigm Shit scenario by
country. The graph clearly shows the key importance o China or the overall PV potential
in the region. This is largely driven by the steep increases in Chinese electricity demand,
as orecast by the IEA.
5 EPIA 2009 : Set or 2020 Report
6 EPIA, Greenpeace : Solar Generation VI to be released in October 2010.
It should be also noted that, when summing up the next 15 middle markets, their
combined PV potential exceeds that o China under the Base and Accelerated scenarios.
Only i the Paradigm Shit scenario came true would China dominate both markets.
Hence, PV in the Sunbelt is a multi-country opportunity, oering a broad range o specic
countries potential throughout several continents ready to be unlocked or realising the
ull Sunbelt potential o PV.
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THE SunbELT vISIOn fOr Pv 17THE SunbELT vISIOn fOr Pv
On the conventional side, uel price assumptions are indexed with uel price projections
based on IEA and EIA projections8. Country specic natural gas prices were assumed
based on regional price ranges, while oil and coal prices were assumed to be global.
The eects o current advances in unconventional gas production technology were
considered in the gas price projections to the extent possible at the time o writing the
report. Figure 10 displays the low and high case conventional uel price assumptions
used in the modeling. The country specic starting points or gas prices as well as
assumptions regarding the impact o unconventional gas on the long term development
o gas prices are included in the methodology appendix.
Figure 9 : PV Levelised Cost of Energy in Sunbelt irradiation conditions 2010, 2020 and
2030
8 International Energy Agency (IEA) : World Energy Outlook 2009; Energy Inormation Administration (EIA) : InternationalEnergy Outlook 2009
1) Turnkey PV systems larger than 1 MWp, 85% perormance ratio; lietime until and ater 2020 is respectively
25 and 30 years; O&M costs 1.5% o Capex; Debt fnancing with WACC : 6.4 %; System Price 2010 :
2,800 - 2,600 /kWp
2) Low and high LCOE correspond respectively with the lowest and highest turnkey system price within the
price range
Sources : NREL, EIA Technology Roadmap Solar photovoltaic energy, A.T. Kearney analysis
PV lCOE RAnGES(1,2) (cts/kW)
cts/kWh
25
20
15
20.1
12.6
7.4
11.8
18.7
11.7
5.4
3.7
8.78.3
5.9
10
5
0
1,300 1,400 1,500 1,600 1,700 1,800 1,900 2,000 2,100OperatinghourskWh/kW
p
2010
2020
20305.2
2010
igigowow
2020
igigowow
2030
igigowow
1,200
Figure 10 :Fuel price assumptions underlying LCOE comparisons
(1) OECD Steam coal import price
(2) Historical prices are or the U.S. the Henry Hub price and or ROW (rest o world) the NBP price
(3) See Appendix, or urther details on price assumptions
(4) More than 50 years o gas production let, given the current production
Source : IEA WEO 2009, EIA AEO 2010, BP statistical review 2009
FUEl
Coal(1)
Naturalgas
(2)
Crudeoil
PRICE ASSUmPTIOnS (3)FUEl PRICE PROJECTIOnS ($ 2008, 2010 - 2030)
Coal price diers betweencountries with and countrieswithout coal resources, i.e.$ 20/tonne, to take intoaccount transport costs
Country specic price, basedon regional price range andgas reserves
Prices in countries withabundant supply o gas (4) willremain the same
Price is the same or allcountries
Residual oil ollows the crudeoil price and is set at 1.7$/gallon (New York HarborResidual Fuel Oil 1.0 % Sulfur)
$2008/MBtu
$2008/MBtu 150
100
50
0
20
10
0
$2008/MBtu
2000 2005 2010 2015 2020 2025 2030
2000 2005 2010 2015 2020 2025 2030
2000 2005 2010 2015 2020 2025 2030
150
100
50
0
150
18
143
14
115
10
76
8
High case
Low case
High case
Low case
ROW Low case
ROW High case
US Low case
US High case
Figure 11 :LCOE comparisons PV vs. conventional low uel price scenario
(1) LCOE o Gas Peaking and Combined Cycle Gas Turbine (CCGT) in gas producing countries wi th very low
gas prices are not displayed
(2) IGCC = Integrated Gasifcation Combined Cycle, a modern coal combustion technology
Source : National Renewable Energy Laboratory, National Ener gy Technology Laboratory, EPIA Set
or 2020, Wor ld Bank, A.T. Kearney analysis
COmPARISOn OF lCOE 2010, 2020, 2030, lOW CASE FUEl PROJECTIOn (cts/kW)
PeakLoadenergysources
MediumLoadenergysources
Based on the aorementioned assumptions laid out above, the comparisons o PV
competitiveness depicted in Figure 11 and Figure 12 show the ollowing :
In 2010, PV is already competitive with no additional support i compared to peak
power generation rom diesel generators, provided their uel is not subsidised. This
already represents a relevant market potential in many Sunbelt countries, where diesel
generators are an integral part o power systems,
By 2020, even in a low uel price scenario, PV is likely to be more competitive than
diesel or gas uelled peak power capacity. It also outperorms all oil red mid-load ca-
pacities and competes with Combined Cycle Gas Turbines and Integrated Gasication
Combined Cycle coal plants or parts o the mid-load market,
By 2030, also in a low uel price scenario, PV will be more competitive than all other
power generation technologies.
20202010 2030 20202010 2030 20202010 2030
LCOE ( cts/kWh)
0
5
10
15
20
25
30
20202010 2030 20202010 2030 20202010 2030
LCOE ( cts/kWh)
0
5
10
15
20
25
30
Gas Peaking(1)Diesel PeakPV
Gas(1) Coal(2) Oil redSizeof barrepresentsregional range
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THE SunbELT vISIOn fOr Pv 19THE SunbELT vISIOn fOr Pv
Hence, even when assuming low conventional uel cost, the competitive position o PV
is likely to become very strong. In a high uel price scenario, PV is already competitive
against all other power generation technologies by 2020. A signicant share o PV as
part o Sunbelt countries power generation mix can thus serve as a major hedge or
economies to saeguard against strong hikes in uel-price driven electricity increases.
This is an additional essential reason why governments should be highly motivated to
support the deployment o PV in their countries already today.
Figure 12 :LCOE comparisons PV vs. conventional high uel price scenario
(1) WACC : 6.4%
(2) LCOE o Gas Peaking and Combined Cycle Gas Turbine (CCGT) in gas producing countries with ver y low
gas prices are not displayed
(3) IGCC = Integrated Gasifcation Combined Cycle, a modern coal combustion technology
Source : National Renewable Energy Labor atory, National Energy Technology La boratory, EPIA Set
or 2020, Wor ld Bank, A.T. Kearney analysis
COmPARISOn OF lCOE 2010, 2020, 2030, hIGh CASE FUEl PROJECTIOn (1) (cts/kW)
Forecaste lCOE o PV i Subet Coutries
With expected price digression o 56% to 66% by 2030 compared to 2010, PV
LCOE in Sunbelt Countries is expected to range rom 5 to 12 c/kWh by 2020
and 4 to 8 c/KWh by 2030.
In Sunbelt countries PV is already competitive today with peak diesel generators;
it would become competitive with gas uelled peak power capacit y as well as
with some mid load capacity by 2020, and would most probably outperorm
all other power generation technologies by 2030.
2.3 Key pre-conditions to realise the SunbeltPV potential
Several barries need to be overcome in order or Sunbelt countries to develop their
massive PV potential. This chapter oers a brie overview o key hurdles that stand in
the way o PV deployment. It suggests general approaches to overcome them, while
a more region-speciic view ollows i n the regional sub-chapters.
As is depicted in Figure 13, the lack o PV know how is an important hurdle to PV deploymentin Sunbelt countries. It prevents PV penetration even where it is already competitive.
Throughout the Sunbelt, PV is still perceived as an expensive energy source mostly
suitable or o grid installations o small and medium size. This misconception is not
only held among local governments and utility sector players, but also in parts o the
development nancing community. As a matter o act, PV can already compete with
other commonly used power generation technologies such as diesel generators.
Also, PV is still not ully considered by some as a suitable option or large scale power
generation. But the truth is that PV is increasingly a competitive large scale alternative
compared to other technologies such as Concentrating Solar Power (CSP).
To address such misperceptions, signiicant awareness building and an inormation
campaign regarding PV are needed among opinion leaders and decision-makers in
Sunbelt countries, but also among development banks and other infuencers.
Figure 13 :Key barriers to Sunbelt PV deployment
PV Know-how & Perception
Policy support / level playing eld
Finance
Grid inrastructure
Implementation & Service
PeakLoadenergysources
MediumLoadenergysources
20202010 2030 20202010 2030 20202010 2030
LCOE ( cts/kWh)
0
5
10
15
20
25
30
20202010 2030 20202010 2030 20202010 2030
LCOE ( cts/kWh)
0
5
10
15
20
25
30
Gas Peaking(2)Diesel PeakPV
Gas(2) Coal(3) Oil redSizeof barrepresentsregional range
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THE SunbELT vISIOn fOr Pv 21THE SunbELT vISIOn fOr Pv
In spite o recent improvements in perceptions, the absence or early stage o policy
support schemes still represents a signicant barrie r. This is aggravated by biases against
PV such as subsidies or conventional energy use and/or end user electricity prices,
which are still widespread. Additionally, administrative hurdles exist due to the novelty o
the technology and/or lack o experience at local, regional and national levels.
Hence, highlighting cases o successul implementation is crucial to support the emerging
policy initiatives in some countries. In other countries, political lobbying to convince key
players o the need or support o PV i s essential. Both activities should be inormed
by policy experiences in Europe. While overly generous support schemes in some
countries have created overheated markets, others have provided a more stable growth
o PV over time. Also, PV support does not have to imply large budgets or cost to the
nal consumer - simple bottleneck removal such as ensuring grid connection and net
metering as well as clear guidance to local and regional administrations or spatial
planning and authorisation procedures can help greatly. This is particularly true in
countries were PV is already competitive compared to diesel generators. Appropriate
and temporary support to close a countrys speciic competitiveness gap will then
ensure accelerated deployment o PV.
Lack o competitively priced nance. While high-prole large projects with political
support are currently able to receive nance, the capability/willingness o nancial
players in Sunbelt countries to nance PV is oten limited.
The lack o nance is o course correlated to the lack o PV know-how and early stage o
policy support discussed above. To the extent that policy support becomes reliable and
word o the benets o PV spreads, nance can be expected to ollow. To accelerate this
development, however, nancial intermediaries need to be an active part o awareness
building. Transerring project inance experience rom established PV markets and
collaborating with industry and policy experts can turn banks into catalysts or PV
deployment rather than constituting a bottleneck. For example, by understanding
the unctioning o mini-grids in rural communities, banks could also beneit rom
stimulating economic activity in areas and customer segments that were not the
ocus o their commercial activity.
Underdeveloped grid inrastructure and inexperienced management limits the
absorption o intermittent power sources and increases operative challenges or grid
operators.
The lack o grids in some part o the Sunbelt region is an opportunity rather than a barrier
to PV. Mini-grids with hybrid systems including PV can ll the gap, leap-rogging the need
or a costly grid extension and support economic development by making electricity
available switly.
This is discussed in detail in the ollowing special section on mini grids.
In cases where existing grids are regularly acing operative challenges, brown-outs or
partial breakdowns, grid-connected distributed PV can be benecial. For example, in
cases o mid-day load peaks, when PV also reaches maximum capacity, the advantage
o generation close to consumption can lower the burden on grids. Hence, the key barriers
in this context are oten grid operators, who are not always aware o these operative
possibilities or lack the experience to manage them successully. In some countries,
PV can prot rom the pioneering role o wind power deployment. Once grid operators
understood how to manage intermittent wind power, they will also be attentive to the
benets o PV, especially where acing mid-day peak demand.
Emerging markets or PV systems and services mean a still limited ability to serve
local PV markets, resulting in higher cost and longe r lead-times due to a lack o competing
oers and long supply chains. This slows PV market development and can put o local
investors.
It is here where the PV sector can contribute actively to unlock Sunbelt potential. Market
making activities o established PV companies are needed to establish PV rmly and to
help create an ecosystem or urther growth in a given country. This is already happeningin some Sunbelt countries, which also serve as manuacturing hubs, but more countries
with signicant potential are waiting to be developed.
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THE SunbELT vISIOn fOr Pv 23THE SunbELT vISIOn fOr Pv
miNi GRiDS
In countries where a signicant part o the population lives in rural areas
without link up to a national power grid, mini-grids can provide a solution or
supplying electricity at a reasonable cost. Mini-grids can connect a mix o
stand-alone electricity sources to private consumers and small business o
a community, thus enabling economic activity, education, improved medical
care, and increased saety levels. They can be interconnected between com-
munities, orming the nu cleus or a more systematic electrication, particularly
in more densely populated rural areas.
Phot ovoltaics Wind Hydro G enerat or
AC/DCConverter
AC/DCConverterand Charger
Change Controller
Master Inverter
and
Battery charger
ACbusline
ACVoltage
DCVoltage
DCbusline
Optional
Battery
ACLoads
DCLoads
Figure A
Figure A shows an exemplary confguration o a hybrid mini-grid using PV, small
wind, small hydro and a backup diesel generator to generate electricity. Bat-
teries can be used as an additional buer to enhance the dispatchability o
the system. Mini-grids have lower and more localized maintenance needs and
signifcantly lower transmission losses compared to long-distance grid extension.
Two main indicators determine the size o a countries mini grid potential :
1) The lower the electrication rate in a country, the larger the potential or
mini-grids,
2) The higher the investment attractiveness o a country, the higher the poten-
tial or mini-grids.
Figure B shows the mapping o all Sunbelt countries with an electrication rate
lower than 90% vs. their respective investment attractiveness. The bubble size
represents the countries total population, while bubble color indicates the size
o the PV Opportunity in a given country. Countries such as India, Indonesia,
and Bangladesh but also the Philippines and Nigeria show a high opportunity
or mini-grids. In those countries alone, more than 710 million people have no
access to electricity today. Hybrid mini-grids including PV applications can
change this situation at competitive cost and should be actively promoted.
Hybridising existing conventionally uelled mini-grids could be a particularly
attractive option to increase PV penetration ast. As PV is almost universally
suitable in Sunbelt countries, it can be retrotted to most existing mini grids,
thus loweringthe need or diesel uel and bringing down lie-cycle cost o the
power supply10.
While the rst indicator appears straightorward, the second warrantsexplanation : investors in a mini-grid need to be reasonably certain o areturn. Hence, the investment attractiveness o a country needs to behigh enough so that any investor can expect to be paid or their serviceby local consumers or the community. Such certainty can also be sup-ported by specic schemes where public or donor support covers thedierence o an aordable electricity price or communities9.
9 JRC A New Scheme or the Promotion o RE in Developing Countries, 2008
10 Compare ARE Brochure : Hybrid power systems based on renewable energies
Figure B
Source : ARE
IncreasingPVOpportunity
IncreasingMini -gridOpportunity
Bubblesi ze= population
100%
80%
60%
40%
20%
HighInvestment attractiveness
0%
Low
GuatemalaVietnam
Sri Lanka
Indonesia
Pakistan
Yemen, Rep.
Angola
Mozambique
Cambodia ZambiaKenya
Cameroon
Bangladesh
Nigeria
Peru
Philippines
NepalSenegal
Ghana
Namibia
South Arica
Botswana
India
TanzaniaEthiopia
Source : A.T. Kearney
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SELECTEd rEGIOnaL PErSPECTIvES On Pv 25SELECTEd rEGIOnaL PErSPECTIvES On Pv
3SELECTED REGiONAL
PERSPECTivES ON Pv
Across the Sunbelt, the penetration o installed PV is low. PV manuacturing indus-try base diers strongly by region, and support policies are only emerging at dierent
speeds. To ensure sucient comprehensiveness while ocus on the most relevant
aspects, a selected group o regions within the Sunbelt is discussed in the ollowing
chapters. These are highlighted in Figure 14 and represent very dierent stages o de-
velopment.
India & China are both signicant players in PV manuacturing in the Sunbelt region, with
China dominating by ar in terms o capacity, while India has the longer track record. But
the installed base is still relatively modest in both countries and policies to spur installation
are still under implementation (India) or under discussion (China). South East Asia
does have some manuacturing capacity and a number o countries are at the verge o
implementing promising support policies. Also, a substantial number o projects are in
the pipeline and PV growth seems imminent. The same is not true orLatin America,
where almost no local industry base exists (with the exception o Mexico) and only some
countries are contemplating signicant support. Here, PV has gained some ground mostly as
an o-grid / electrication opportunity, not yet as a part o the mainstream power mix. In the
Mediterranean & Northern Arican region, the solar potential is only beginning to be tapped
into. PV still needs to be positioned much more strongly in this process which is driven by local
policy makers and development banks.
Figure 14 : Focus regions o Sunbelt as scope or regional analysis
Figure 15 :2030 Paradigm shit regional potential and key regional indicators
SElECTEd FOCUS REGIOnS
PV potential o13 GW by 2020 and48 GW by 2030 inthe Acceleratedscenario
Current developmentdriven by o-gridapplications inremote areas
PV potential o7 GW by 2020 and27 GW by 2030 in theAccelerated scenario
Large scalesolar projectsare announced;openness or PVincreasing
PV potential o53 GW by 2020 and228 GW by 2030in the Acceleratedscenario
Surging electricitydemand and existingmanuacturing basedrive PV potential
PV potential o10 GW by 2020and 46 GW by 2030in the Acceleratedscenario
Existingmanuacturing basedrives PV growth inthe region
0
35n
35S
Countriesinscopeo study
Sunbelt
LATINAMERICA
MEDITERRANEAN &NORTHERN AFRICA
CHINA& INDIA
SOUTH EASTASIA
Electricity cons. (TWh)
PV (3) attractiveness
Country (3) attractiveness
% o fexible energy sources
GDP (bn$)
PV LCOE (2) (/kWh)
Approx. Cumul. Inst. Cap. (MW)
242
+++
+++
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SELECTEd rEGIOnaL PErSPECTIvES On Pv 27SELECTEd rEGIOnaL PErSPECTIvES On Pv
From a PV potential perspective, Figure 15 highlights the signicance o the selected
ocal regions and oers a comparison o some key indicators across all regions. The
specic trends opportunities and challenges in ocus regions are discussed in more
detail in the ollowing sections.
3.1 Mediterranean and Nor thern Arica
The energy uture o non-EU Mediterranean countries as well as Northern Arica
currently receives a lot o attention. This is in part due to the high importance o
energy or the continued dynamic economic development o countries such as Turkey,
Egypt and Morocco, which ace signicant domestic supply challenges. Partly, however,
the attention is also politically driven by the European Union, which intends to increase
Mediterranean economic cooperation with programs such as the Mediterranean
Solar Plan, one o the main initiatives o the Union or the Mediterranean. Also, the
industry driven Desertec Industrial Initiative (DII) has broadly publicised the idea o an
integrated EU / Northern Arican energy grid with strong solar energy components11.
Although the region is receiving much attention, it is o medium potential and opportunitywhen compared to the other Sunbelt regions. With a combined GDP o over $1.5 trillion
it accounts or about 9% o Sunbelt GDP and is growing about 3% per annum. While the
region accounts or about 6.8% o todays Sunbelt electricity consumption, the identied
30 MW o installed PV represent only around 4.4% o the identied PV capacity in all
Sunbelt countries. Figure 16 positions the regional countries in scope vs. the regional
and other-sunbelt countries average.
The regions countries show a signicant variation o investment competitiveness, mostly
driven by political uncertainties in some countries, which reduce the attractiveness
somewhat versus an overall relatively stable macroeconomic development. Limited
support policies or renewable including PV exist in most countries, except or Libya and
Syria where no policy supporting PV is reported. Here, the Mediterranean Solar Plan
with its target o 20 GW o renewable energy to be deployed by 2020 in the region could
possibly play an important role.
The attractiveness o PV or the countries in the region varies less strongly and is about
Sunbelt average or important energy markets such as in Egypt or Turkey, where strongly
increasing energy demand is a key driver. A relatively high degree o fexibility in the
generation mix with signicant shares o oil and gas is a urther enabler or PV, while at
the same time indicating a comparatively attractive cost position o PV in terms o mid-
term LCOE dierential.
High electrication rates ranging rom 93% to 100% indicate that the o-grid potential o
PV is relatively less important i compared to other regions. Signicant PV growth in the
region would likely ocus more on grid-connected installations, which would constitute
a departure rom the current main application o rural electrication.
Throughout the region, only a modest base o installed PV capacity and PV manuacturing
exists to date, but an ambition or larger scale projects exists.
Figure 17 provides an overview o i dentiied capacities and selected sample projects
announced.
11 http://www.dii-eumena.com
Source : A.T. Kearney analysis
Figure 17 : Med & NA countries installed capacities and example projects
SElECTEd PhOTOVOlTAIC PROJECTS In mEdITERRAnEAn And nORThERn AFRICA
Isooton announced1 MW o PV systems
Themasol and BPSolar announcedan o-grid PVproject o 7.7 MW
MOROCCO
Egyptian NationalResearch Centrereports 15 MW oPV capacity underpreparation
EGYPT
TF announced 1,000MW o PV by 2017
NEPCO announceda 20 MW PV project
Shams Maan PowerGeneration PSCannounced a 200 MWo PV plant
JORDAN
Anel Enerji & Inciannounced a 20 MWPV plant
TURKEY
Production capacity or cells
Cumulativeinstalled PVcapacity
Production capacity or thin lm modules
Production capacity ormodules
morocco :6 mW
Tuisia1.4 mW
Turke :5 mW
Israe :25 mW
Ageria2.3 mW
Egpt :3 mW
0 MW
0 MW
200 MW
Jora :0.2 mW
0 MW
0 MW
39 MW
Figure 16 :Med & NA countries PV Opportunity positioning
Source : A.T. Kearney analysis
High
HighRegional investment attractiveness
P
Vattractivenessforregion
LowLow
TunisiaMorocco
Algeria
Jordan
Turkey
Israel
Lebanon
Syrian Arab Republic
Lybia
Egypt ArabRepublic
Increasing PVOpportunityAverage other sunbelt countries
Average Mediterranean & Northern Arica
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SELECTEd rEGIOnaL PErSPECTIvES On Pv 29SELECTEd rEGIOnaL PErSPECTIvES On Pv
One striking actor in the regional discussion is that many actors on the government and
donor side ocus very much on Concentrating Solar Power (CSP) applications when
talking about Mediterranean and North Arican solar potential. This refects partly the act
that there are several CSP investment projects ongoing or some time already, mostly
in the orm o hybrid applications with gas, e.g. in Morocco, Algeria and Egypt. PV,
however, is becoming more present in initiatives such as the Government-sponsored
Moroccan project or 2 GW o solar energy which is open or PV as well as CSP. Also,
the well known Desertec Initiative is now stressing the act that it is technology neutral,
i.e. open to both CSP and PV applications. For more inormation, see the special section
about CSP and PV.
development bank players needs to change undamentally. A key example is the
multi-donor unded Clean Technology Fund which was created in 2008 to provide
scaled-up inancing or demonstration, deployment and transer o low-carbon
technologies that is administered by the World Bank. While signicant loans are
earmarked or solar investment, only CSP with trough technology is currently seen as
scalable and bankable.
Policy support in the region exists in the orm o established renewable energytargets, which countries such as Egypt, Algeria and Morocco have dened. Nevertheless,
support mechanisms such as eed-in taris are largely lacking with the exception o
Israel, where a eed-in tari or small applications exists. An important drat law has
been under discussion in Turkey already or some time, while countries such as
Jordan support PV with individual large scale developments. In addition to this wide
spread absence o systematic policy support, extensive documentation requirements
and bureaucratic hurdles make project development very dicult.
Figure 18 :Med & NA countries photovoltaic
potential 2020/2030
PROJECTIOn OF CUmUlATIVE InSTAllEdPV CAPACITy (GWp)
Source : A.T. Kearney analysis
2010
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SELECTEd rEGIOnaL PErSPECTIvES On Pv 31SELECTEd rEGIOnaL PErSPECTIvES On Pv
CSP PV
Installed baseend 09 (GW)
0.7 22
Role Mid-Merit / Peak Intermittent / Peak
LCOE($ct/kWh)
09 19-30 29-33
20 11.5-27.5 9.5-12.0
Ease o gridconnection
low medium
Oten high distance to
consumption areas, HVand/or DC links needed
Distributed PV simple, large
PV plant on ground acilitiesneed MV or HV link
Short termenergy ondemand
Possible with thermal storage not possible / expensive
Dispatchable, i thermalstorage is part o concept
Intermittent generation, buthigh degree o predictability;still expensive storage
Ease odeployment
difcult simple
Specic land / climateconditions required :signicant water needs ornon-aircooled system
Hybrid solution can lowerCAPEX requirement inselected locations
Strong requirement on eldtopography
Simple installation, very astlead times
No signicant water needsScalable, can be phased
3.2 South East Asia
South East Asia (SEA) is home to some ast growing economies and an emerging hub
or PV manuacturing in Asia. Although political stability deteriorated recently in Thailand,
the region at large has enjoyed a stable economic development over the recent past.
The countries in scope (Figure 19) account or a GDP o over $1.5 trillion and make
up 9% o Sunbelt GDP - comparable to that o the Mediterranean and North Arican
countries discussed in the previous chapter. However, SEA countries in scope have
been growing more dynamically with a strong growth rate o 4.3% in 2008. Also, their
installed PV capacity amounts to over 60 MW, which constitutes around 7% o Sunbelt
installed PV capacity. This compares to an electricity consumption o 515 TWh or about
7% o Sunbelt nal electricity consumption, showing a slightly above average penetration
o PV.
The PV growth is mostly driven by Thailand and Malaysia, where comprehensive support
policies are emerging. Overall, the PV Opportunity mapping o the region results slightly
above the average mapping o the other Sunbelt countries in scope (Figure 19).
An important driver o urther PV growth is the already competitive cost position in
particular in the many isolated systems on SEA islands. PV LCOE in 2010 ranges
between 15.5 and 17.6 cts/kWh in the region, which is already in the competitive range to
diesel or gas generated peak power LCOE (9.9 18.3 cts/kWh). Overall, the power generation
uel mix is quite heterogeneous across the region, with Vietnam sourcing only 36% rom gas
or oil, while the shares o Malaysia and Cambodia reach 64% and 96%, respectively.
Electrication rates in the region range rom 65% to 100%, except or Cambodia (24%)
where PV can make a particular contribution or rural electrication. Hence, on-grid as
well as o-grid PV applications will likely play a signicant role in SEA.
Figure 19 : SEA countries PV Opportunity positioning
Increasing PVOpportunity
High
HighRegional investment attractiveness
PVattractivenessforregion
LowLow
Average other sunbelt countries
Average South East Asia
Singapore
Malaysia
Thailand
Philippines
VietnamCambodia Indonesia
Source : A.T. Kearney analysis
Pv AND CSP
Photovoltaic (PV) and Concentrating Solar Power (CSP) represent two
distinct solar power generation technologies, which oer a diverse set o charac-
teristics that make each o them suitable or particular conditions and objectives. The
table below oers a comparison along a number o key criteria.
The distinct properties o PV and CSP make them suitable or dierent
applications that can well complement each other in Sunbelt conditions. While
CSP has a role to play, or example, in combination with already established con-
ventional power generation and contributes to dispatchable solar energy in
cases where thermal storage is provided, PVs chie role lies in supplying peak
power in a broad range o application sizes in close proximity to consumption.
Jointly, they can increase the maximal penetration o solar power in manySunbelt countries. One area o overlap exists regarding larger scale applications
in desert conditions. Here, the advantages and disadvantages o the technologies
have to be weighed in everyparticular investment case :
I te case of CSP :
Advantages : Thermal storage option enables dispatching of output; can be combined
with existing conventional power plants.
Disadvantages : Installation location limitations (direct radiation, large, at ground &
signifcant water requirements). Limited project experiences with the exception o para-
bolic trough technology.
Regarig PV :
Advantages : No location limitations, full scalability/modularity of project size, indirect
sunlight can be utilised and no signifcant water needs exist
Disadvantages : Day production only unless enhanced with (still expensive) battery storage
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SELECTEd rEGIOnaL PErSPECTIvES On Pv 33SELECTEd rEGIOnaL PErSPECTIvES On Pv
SElECTEd PhOTOVOlTAIC PROJECTS In SEA
Production capacity or cells
Cumulative installed PV capacity
Production capacity or thin lm modules
Production capacity or modules
IEAGT announced 8 MW osolar power Installations
A Hong Kong based electricityproducer announced to builda 55 MW solar power plant
Conergy entered a consortiumand announced to builda 3 MW solar plant
Thai Government announcedto develop a 73 MW solar elduntil 2012
THAILAND
MYANMAR
LAOS
CHINATAIWAN
Quang Binh department oIndustry and Trade announcedto install solar battery systemsto generate electricity or dailyuse in remote communestotaling 790 kW
VIETNAM
Indonesian governmentannounced to extendan existing PV plantwith 50 MW
INDONESIA
550 MW
0 MW
590 MW
Sigapore1.4 mW
Vieta0.8 mW
Caboia0.1 mW
Piippies0.6 mW
574 MW
0 MW
0 MW
maasia11 mW
150 MW
812 MW
0 MW
25 MW
60 MW
65 MW
Taia40 mW
Ioesia6.5 mW
A look at the installed PV and PV manuacturing capacities by country (Figure 20) under-
lines that the region is clearly emerging as a manuacturing hub and that PV deployment
appears to be going along with this development. Singapore and Malaysia stick out rom
a manuacturing perspective with a high output o modules that could satisy strong
increases o regional demand.
A number o high proile and large scale projects indicate signiicant increases in
installed capacity also in the grid connected arena. Nevertheless, the currently announced
projects do not yet represent a stable fow o policy supported investment, but in many
cases represent announcements o what could be done i sucient policy support were
available. In that regard, the announcement that Malaysia will introduce a eed-in tari
Figure 20 : SEA installed capacities and example projects
in 2011 sends a strong signal to its neighbors in the region that PV can make
a contribution as a grid-connected source o electricity in addition to the o-grid
applications already in use in the region.
Figure 21 presents the regional PV potential or the South East Asia region according
to the three scenarios dened in section 2.3 o this study. The Accelerated scenario
suggests an installed PV base o 10 GW by 2020, accelerating growth until 2030 to
reach 46 GW. I a Paradigm Shit should occur, a 20 GW potential exists in 2020, and
a 2030 gure o 92 GW could be reached.
The key barriers and preconditions identiied in chapter 2.3. hold true also in the case
o South East Asia. A number o specic preconditions to enable signiicant penetration
o PV in the region are :
Know-how and perceptiono PV
or hybrid systems as an opportunity
to displace other uels (or example
expensive diesel generation on
islands) needs to be enhanced by
understanding the grid connected
potential o PV as well.
Policy support or PV is emerging
or imminent in some markets such
as Malaysia, Thailand and Singa-
pore. These should be designed to
ensure sustainable support levels
based on competitive installed
system prices. Currently reported
FiT levels o $0.39 to $0.54 per kWh
or 21 years under discussion in
Malaysia12 appear, however, rather
on the high side. I successul,
sustainable policies might serve
as templates also or other SEA
countries such as Indonesia and
the Philippines, where currently no
signicant policy plans are report-
ed.
Financestill constitutes a key barrier in the region and the economic crisis has
worsened the situation. Long term government support as well as utility investment will
re-invigorate bank trust in PV projects and enable additional nance rom banks.
Gridchallenges are not likely to occur soon given the low penetration o PV to date.
Ensuring eective rules or grid connection is an important precondition or short term
development o PV, while realisation o higher PV additions in the mid- to long-term
can pose ewer rather than additional challenges in countries with expanding electricity
demand and generation capacity.
Implementation and Service- Leveraging the existing ootprint o PV industry in the
region, it should be possible to improve availability and quality o PV installation and
support to nal customers. Manuacturers active in the region might do well to consider
downstream activities in order to acil itate regional growth rather than ocusing
exclusively at technology export.
12 http://www.ecoseed.org/en/general-green-news/green-topics/green-policies/eed-in-tari/7075-Malaysia-nalizes-details-o-eed-in-tari-or-renewables
Source : A.T. Kearney analysis
Figure 21 : SEA photovoltaic potential 2020 / 2030
PROJECTIOn OF CUmUlATIVEInSTAllEd PV CAPACITy (GWp)
2010
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SELECTEd rEGIOnaL PErSPECTIvES On Pv 35SELECTEd rEGIOnaL PErSPECTIvES On Pv
SElECTEd PhOTOVOlTAIC PROJECTS In IndIA And ChInA
Production capacity or cells
Cumulative installed PV capacity
Production capacity or thin lm modules
Production capacity or modules
ZebaSolar announced installation o 10 MW PVcapacity in India by the end o 2010
Astoneld Renewable Resources and Belectricannounced to build a 5 MW PV plant
NTPC announced that it would construct111 MW o PV capacity by 2014
Topsun Energy Ltd. announced plans toconstruct a 5 MW PV system in Gujarat
INDIA
The Chinese Government selected 294 projectstotaling 642 MW to benet rom their GoldenSun subsidy
Diverse developers announced a total o12,5 GW o PV projects in China, butdeployment will depend on governmentalwillingness or additional nancial support.Examples are :- FirstSolar announced plans to build a 2 GW PV plant
in Mongolia- Suntech announced the extension o a 10 MW utility
scale PV plant up to 50 MW by 2011
CHINA
3.3 China and India
As the worlds most populous countries with steeply increasing electricit y demand, China
and India play a crucial role or PV in the Sunbelt. While the two countries dier very
strongly on many counts, they are treated jointly here due to their large impact or overall
PV development in the Sunbelt. As Figure 22 illustrates, China and India are located in
the same cluster o highest, with China being better positioned in terms o investment
attractiveness, while PV shows a slightly higher attraction or India than or China.
I grouped as a region their average PV Opportunity rating is signicantly higher than
that o all other Sunbelt regions in scope.
The combined GDP o India and China amounts to over $5.5 trillion and accounts or~35% o Sunbelt GDP. Gross Domestic Product was growing at a rate o ~8.4% in 2008.
In terms o energy, the huge weight o India and China in the Sunbelt region is even more
apparent : with an el ectricit y consumption o 3,682 TWh, they ac counted or ~54% o
Sunbelt nal electricity consumption in 2007 (last year or which comparable numbers
were available). This signicance is refected in terms o PV - with a combined total o 460
MW, more than 50% o Sunbelt installed PV capacity was installed in India and China.
What is more, both countries share dynamic growth rates o electricity consumption
and experience supply bottlenecks in catering to the tremendous electricity demand
growth.
The discussion in the ollowing section will ocus on each country separately beore
comparing PV potential and barriers to deployment or both countries.
3.3.1 India
Assuming competitively priced installed systems, PV in India can reach LCOE between
12.4 and 13.4 cts/kWh in 2010. This is well below the range o diesel uelled peak
power (around 16-18 cts/kWh) but slightly a bove gas red peak capacit ies (10-11 cts/
kWh). PV can thus already make a positive contribution to the undamental economics o
power supply in India where a share o 12% o oil and gas red capacity is used or peak
power supply. Apart rom grid connected peak power, PV can also make an important
contribution to the electrication in o-grid/mini-grid applications. This is o high economic
relevance as only 65% o Indian population is currently connected to an electricity grid.
Due to a comparatively long PV tradition including several mid-sized manuacturing
players, Indias installed capacity o 130 MW (Figure 23) is signicant compared to most
Sunbelt countries. This capacity is mostly o-grid capacity in rural regions, which refects
the perception most policy-makers and development banks had o the application o PV.
Figure 23 :India & China installed capacities and example projects
Figure 22 : India & China PV Opportunity positioning
Source : A.T. Kearney analysis
Increasing PVOpportunity
High
HighRegional investment attractiveness
PVattractivenessforregion
LowLow
Average other sunbelt countries
Average China & India
India
China
6.085 MW
444 MW
6.856 MW
557 MW
50 MW
407 MW
Cia300 mW
Iia160 mW
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In 2009, however, India passed the Jawaharlal Nehru National Solar Mission, which
targets the installation o 22 GW solar power by 2022. 20 GW o this capacity is intended
to be grid connected, while 2 GW are slated or o-grid applications.
During a rst implementation phase until March 2013, grid connected PV and CSP will be
supported up to 500 MW each. Additionally, 200 MW o PV o-grid will be supported.
The technology ocus or on-grid solar installations during later phases is not explicitly
dened, but expected to promote both PV and CSP. The ocial guidelines stipulate
a number o restrictions regarding project size, local content and number o projects per
developer, which are to be reviewed regularly13.
While project acceptance and dissemination o inancial support is thus handled on
a national level, project preparations will involve a designated agency on the State level,
which is to acilitate access to land, water, and the electricity grid. It remains to be
see, how quickly States will be able to provide this acilitation and handle the expected
high number o project proposals. Apart rom potentially slow or overtaxed State level
processes, the issue o land use is traditionally dicult in India. Obtaining agricultural or
industrial land or PV system installations might impact project lead times signicantly.
Roo-based systems can avoid this pitall, but bring their own challenges in an emergingmarket with a lack o experienced installation players.
Overall, it needs to be stressed that the Indian Government intends to review and adapt
policies and technological ocus depending on its experience with the scheme. While
the initial installation numbers might thus seem small, the establishment o a stable policy
process and emergence o well adapted players and technologies can enable a signicant
scale up ater the initial phase.
3.3.2 China
In China, PV can already reach LCOE between 15.3 and 16.5 cts/kWh in 2010. This is
slightly below the range o diesel uelled peak power (around 16-18 cts/kWh) but above
gas red peak capaciti es (10-11 cts/kWh). As peak power in China is dispatched almost
exclusively rom hydro acilities owned by grid operators, the generation cost comparison
or grid connected PV is not straight orward. While PV can be assumed to ree some
hydro capacity, which could in turn displace some coal based generation, there is no
explicit system peak power cost that would allow or a direct comparison. Hence, on
a system level, external benets o PV would have to enter the equation to make the
business case or PV deployment.
Nevertheless, on the commercial end-consumer side, locally dierentiated peak prices
or power exist, as regional grid operators try to incentivise consumers to decrease
demand in peak times. PV could thus play a role or the sel consumption o commercial
customers trying to shave costly peak usage and/or or regional grid operators which
are struggling to balance peak loads only with limited hydro sources. While sizable in
absolute terms, the o-grid potential in China appears to be limited to remote areas,
while the bulk o electricity demand is in the heavily populated coastal areas, where the
penetration o the electrical grid is very high. In these areas, land is scarce/expensive,
pointing to a need or roo-based/building integrated development rather than large scale
ground- based systems.
While China commands the largest PV manuacturing capacity in the world, its installed
base o PV is insignicant by comparison (Figure 23). PV capacity additions in China have
emerged only over recent years under the Golden Sun support system or PV. However,
support is capped at 20MW per province and the current overall target is 20 GW by
2020. The Chinese authorities appear currently reluctant to lit the PV caps : as mentioned in
Figure 23, a staggering 12.5 GW o PV projects were an nounced by potential investors by
late 2009. Once unleashed, PV growth in China could be explosive. This is perceived by
the government to be neither cost eective or the overall electricity bill, nor easible or
absorption in the power grid. Clearly, the huge success o wind power, which has grown
over 110% annually in the last our years and has exceeded the ocial growth target or
2010 by a actor o 5, has made the authorities and energy sector companies cautious
regarding triggering a development that might be dicult to manage.
The large manuacturing base is oten seen as a reason why China should open a
domestic market. This is not necessarily obvious to an export-oriented country like China
that supplies the world with many products or which it has no signicant domestic
market. Given that export is currently still going airly well despite decreasing competi-
tiveness due to the weakening Euro, there is no immediate need or China to trigger
domestic demand rom an industrial policy point o view. In act, Chinese ocials havestated that there is overcapacity in PV manuacturing. They might thus not deem it
necessary to rescue all domestic producers, even i exports should slow.
3.3.3 China and India Potential
Figure 24 displays the PV combined
potential scenar ios or India and
China. The large dierence between
the Paradigm Shit and the Accel-
erated Scenario is striking. This is
due to the digital nature o Chinas
expected development. The Accel-
erated scenario assumes a some-
what muted development in China
with PV reaching only 160 GW
o installed capacity by 2030, i.e.
eightold o the oicial target o
20 GW or 2020, while India would
contribute 68 GW, slightly more than
threeold the Solar Mission target
or 2021. Jointly the two countries
would account or 228 GW or 56%o overall Sunbelt PV potential under
the Accelerated scenario.
For the Paradigm shit, however, it
is assumed that China would shit
gear and develop to the ull extent
their PV Opportunity. This would
result in 640 GW o installed PV,
generating a 12% share in power
generation by 2030. India would in
the same Scenario reach 130 GW
installed, meaning the both countries
would jointly account or 69% o
overall Sunbelt potential.
PROJECTIOn OF CUmUlATIVEInSTAllEd PV CAPACITy (GWp)
2010
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Further preconditions that would need to be met along the already introduced categories
are listed in the table below
nEEdEd ACTIOnS / mEASURES
IndIA ChInA
PRECOndITIOnS
KnOW-
hOW
/
ImPROVEd
PERCEPTIOn
Need to increase levels o PV
know-how at util ity as well as
at State / Province level, to
enable the rapid implementation
o the Solar Mission with a broad
range o PV applications.
Need to overcome reluctance to
increased shares o PV in central
government and energy sector
companies. This is usually less o
a problem in Provinces that have
a signicant PV manuacturing base
and are keen to develop domestic /
regional installer markets as well.
POlICySUP
PORT
Need to ensure implementation o
the Solar Mission on a State level.
This should be driven with high
priority so that traction is gainedsoon. Need to anchor PV rmly also
as a large scale, grid connected
power source while developing the
signicant o-grid potential as well.
Need to actor in the externalities
o oss i l uel use as cost or
the least cost comparison by
Chinese decision makers. Thiscould lead to a re-appraisal
o PV as a viable opt ion rom
an economic point o view to
provide the rationale to lit caps o
support systems in place.
FInAnCE
Need to dene a clearer picture
o the actual implementation o
support policies in India, which
is current ly ho lding up the
development o PV plants.
As Finance is available through
state owned and private banks it
does not constitute a signicant
bo t t l eneck o r commerc ia l
investors.
GRId
ChAllEnGES
Need to address the lack o an
electricity grid in many regions
by leveraging PV as an element
o hybrid mini-grid systems to
leaprog development patterns
and electrication without massive
investment in the expansion o
the national grid.
Need to address concerns among
gr id operators regarding the
stability o grids when integrating
PV. The potentially beneicial
nature o PV as a natural balance
to wind needs to be examined.
Integrated management concepts
o a ne two rk o r enewables
need to be tested/introduced.
Incentivising PV development
in portions in the grid that arein need o peak power and / or
are close to demand centers can
mitigate the perceived problems
signicantly.
ImPlEmEnTATIOn
AndSERVICE
Need to build on the domestic
manuacturing base to provide
a base level o services, while
improving industry design and
quality standards to channel
development act ivi t ies and
increase quality control o end
consumer installations.
Need to develop the domestic
market to provide an opportunity or
PV players producing in China to
grow also downstream in the value
chain. Many companies are entirely
geared or export and ocused
on manuactur ing and have
not currently build up signicant
domestic service capabilities.
3.4 Latin America
Overall, Latin America provides a PV Opportunity close to the overall average o the
Sunbelt region. At the same time, the current utilisation o this opportunity is relatively
low.
Latin American countries in the scope o this study have a combined GDP o over
$4 tri l l ion accounting or 26% o the energy generation capacity installed in the
regions researched. This is much larger compared to the GDP o Mediterranean, Northern Arica
and South-East Asian countries discussed in previous chapters. Also GDP growth was
relatively high in 2008 (4.1%). However, the cumulative PV installed capacity amounts to
only 56 MW, being around 4% o Sunbelt installed capacity. Around 95% o this PV base
is located in Mexico, Brazil and Argentina, with almost no installed capacity reported in the
other countries considered in this region. Comparing this to an electricity consumption
o over 1,000 TWh (15% o Sunbelt nal electricity consumption), the Latin American region
shows a below average penetration o PV compared to the other regions.
The investment attractiveness o Latin American countries is scattered signiicantly.
Chile, Mexico and Brazil lead while Venezuela, Jamaica and Ecuador lag behind
(Figure 25). This wide spread is partly the result o a variation in policy support existing
today in these countries. While Venezuela, Jamaica and Colombia dont have any policy
support reported, other countries in the region, such as Chile, have an explicit political
target regarding the renewable energy share and require power generators to meet
minimum quotas o renewable energy. While a quota system may not address the
need or PV specic support, the act that some Latin American countries have dened
renewable energy policy targets will help to unlock the potential in the region. Legal preconditions
such as the permission or grid-connection o PV systems have evolved lately in
important countries such as Mexico and Chile.
Figure 25 :LA countries PV Opportunity positioning
Increasing PVOpportunity
High
HighRegional investment attractiveness
PVattractivenessforregion
LowLow
Average other sunbelt countriesAverage Latin America
Brazil
Mexico
Chile
Colombia
Peru
Argentina
DominicanRepublic
Costa Rica
Guatemala
EcuadorVenezuela, RB
Jamaica
Source : A.T. Kearney analysis
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Except or Peru and Guatemala, the electrication rates are well above 92%, appearing
rather high, which seemingly diminishes the potential or o-grid PV compared to other
regions in the Sunbelt. However, there is already a signicant amount o conventional
mini-grids installed e.g. or industrial / commercial applications in remote operations.
Turning such systems into hybrid systems including PV could be the lowest hanging ruit
or rapid PV deployment. In addition, the PV potential or peak electricity is very high in
countries such as Argentina, Dominican Republic, Jamaica and Mexico having a highly
lexible generation mix (over 65%). The other countries in scope in this region show
a more average fexibility around 30%.
In hal o the countries in scope o the Latin American region, installed PV capacity has
been reported to date (Figure 26) and Mexico has a signicant manuacturing base or
PV modules. Figure 26 shows also the installed capacity in the region and a selected
number o projects announced. These add up to over 200 MW when implemented,
suggesting that a signicant growth o PV in Latin America is imminent.
Figure 26 :LA installed capacities and example projects
or Argentina, they tend not to ocus on PV. Also, given the lack o a signicant domestic
industry base, they operate in a dicult environment, where their lobbying power could
proit rom additional support also rom players not yet present in LA countries.
Increased awareness or the potential o PV among policy makers but also media
and utilities would lay the oundation o improved PV support policies and removal o
administrative barriers.
Generalisedsupport policies or renewables exist already in countries like Chile, Brazil,
Mexico and Argentina. Nevertheless PV speciic support needs to be created to
unleash PV growth in these countries. In other countries such as Venezuela, Jamaica
and Colombia, PV policy still needs to be created rom scratch. Latin America as
a whole can learn rom existing policies in markets such as Malaysia or Thailand, where
relatively better PV deployment exists already today.
Also in the L A region, nance still constitutes a key barrier. The combination o private
investment (utility investment) and international partnerships (World Bank, others) can
provide necessary nancing means or larger scale PV deployment in the region.
Grid connectionis absolutely key or large PV deployment. While undergoing testing
e.g. in Chile, it is not the rule yet everywhere in the region. But the promising example
o Brazil, which is moving towards obligating grid operators to connect PV systems
starting in 2011, could serve as an icebreaker or PV growth.
Implementation and Service : The example o Mexico, which uses its proximity to
the US to export PV modules, shows that a PV manuacturing base can emerge even
i the domestic market remains initially small. This provides a good supply base that
can acilitate signicant growth. Willingness to commit to the creation o a local manuacturing
base would greatly enhance governmental attention towards supporting local
PV deployment.
PROJECTIOn OF CUmUlATIVEInSTAllEd PV CAPACITy (GWp)
2010
$ 42 mln)
Solar Energiaannounced tobuild a PV plantwith 160 MWcapacityby 2012
MEXICO PERU ARGENTINA BRAZILCHILE
Source: A.T. Kearney analysis
Source: A.T. Kearney analysis
Production capacity or cells
Cumulative installed PV capacity
Production capacity or thin lm modules
Production capacity or modules
6 mW
0.29 mW
n/A
n/A
n/A
n/A
MEXICO
0 MW
0 MW
245 MW
40 mW
BRAZIL
14 mW
CHILE
2.5 mW
ARGENTINA
0 MW
0 MW
1 MW
10 mW
PERU
n/A
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Governments and policy makersare establishing the crucial ramework or PV growth. In
many cases in the Sunbelt, the undamentals such as enabling grid connection and net
metering, empowering local planning authorities to authorise PV acilities and enabling
tax and custom exemptions or PV generated power or PV technologies are needed
to acilitate baseline PV growth. For more ambitious PV penetration, reliable and
sustainable support schemes such as eed in taris are needed to jump-start local
PV deployment and enable the build-up o a domestic industry supplying, installing and
maintaining PV systems at competitive prices.
While the role o governments can thus hardly be overstated, it is important to understand
that their acilitation is oten directly aected by the plans and perceptions o national
utility sector players. The situation and objectives o power generation as well as on the
grid operation players thus need to be considered. Here, PV needs to convince by its
positive attributes as a peak source o energy that can, i installed close to consumption
centers, actually decrease grid pressures and increase low carbon, domestic generation
at almost zero marginal cost.
Concrete commitments o the PV industryare equally important in unlocking markets.
Policy makers are not inclined to install avorable policies to jump-start markets i mosto the value generation is created elsewhere. While the job creation argument is not
equally applicable to all markets, it is worth pointing out that increasing portions o value
creation are actually earned with installation and other downstream services, which are
mostly local. But industry cannot remain passive and wait or the opening o key markets.
Aggressive pricing and early market entry rather than aggressive lobbying or support
might do more to open markets in the long term. Establishing signicant coverage or cli-
ent services and potentially even collaborating with competitors to ensure sucient scale
or national manuacturing bases could constitute new ways to create markets.
Development agencies and banks play an important role in the institution building
as well as the nancing o solar power development. In many Sunbelt countries, they
are long standing advisors to government as well as energy sector players. They
provide nance or co-nance where uncertainties are high and thus acilitate participation
o private capital in inrastructure and other projects. Overcoming the apparent
reluctance o development banks to endorse PV as a mainstream source o power is
thus a key measure. This should acilitate important milestone projects which would
open the PV market in certain countries where PV is currently simply not considered as
a technological option.
Private inancial institutions are more than willing to invest in sustainable energy
applications worldwide, provided risk-adjusted returns justiy the engagement. A key actor
is risk perception, which oten depends on an observers personal background and
experience. PV experienced nancial institutions oten have a European FiT market
background. They need to understand the specic conditions o Sunbelt countries where
the regulatory engagement is likely not to oer the same level o certainty. Local banks
operating in the Sunbelt, however, usually have no signicant experience with nancing
PV. Hence, partnerships between local banks and international partners, or in-house
know-how transers o large multinational banks with a presence in Sunbelt countries,
would likely acilitate Sunbelt PV nancing options.
Last but not least, national and international PV associations have an important role
as acilitators o the discussion between industry, utilities, governments and the nancial
and development communities. They should provide a national source o reliable
inormation and act as brokers and matchmakers between stakeholde