Solar Leasing: Key Market Driver As Government Incentives Dry Up

We’ve produced several articles recently on the rise of the solar leasing model and the fact that it’s making solar accessible to more people.

It’s even more important than we thought: Pike Research predicts it will be among the most important drivers for the solar PV market for the foreseeable future, rather than government-funded incentives like feed-in tariffs which have fueled growth to date.

New residential financing mechanisms and third party ownership models will be the key drivers through 2015, says Pike.

They expect the distributed solar market to grow from $66 billion in 2010 to more than $154 billion annually by 2015, a compound annual growth rate (CAGR) of 18%, raising world capacity from 9.5 gigawatts (GW) to more than 15 GW.

Between 2006-2010, total global capacity of many renewable energy technologies – including solar PV, wind power, concentrated solar power (CSP), solar water heating, and biofuels – grew at rates ranging from around 15% to nearly 50% a year. Solar PV, the dominant form of renewable distributed energy generation, increased the fastest of all renewable technologies during this period.

In 2010, the solar PV market grew at a rate of 72%, illustrating the acceleration of solar PV deployment worldwide.

"Solar PV capacity was added in more than 100 countries during 2010, and a similar number in 2011," says research analyst Dexter Gauntlett. "The market is led by residential and commercial grid-connected PV systems and is concentrated in regions with favorable financial incentives, such as premium feed-in tariffs for PV, including Germany, Italy, France, Czech Republic, Japan, Canada, and the United States, led by California."

But markets that depend on financial incentives can shift suddenly. In 2008, a 500 megawatt (MW) cap in the tariff caused the Spanish PV market to collapse, creating a glut of solar PV modules on the market. Germany, by far the largest market for solar PV systems, recently cut its tariff as well. Using the lessons learned from these markets, other countries are proceeding more cautiously by incorporating caps, local content rules, and restrictions into their programs to help predict and manage the costs.