Solar industry: stage is set for global recovery - Middle East interest evident

Global growth in the photovoltaics (PV) market is forecast to reach 46% in 2010. There has been a growing interest in the Middle Eastern countries for solar power as both Governments and companies start thinking beyond petroleum. Some of the recent initiatives in the region such as Abu Dhabi being named as the Headquarters of IRENA as well as the Masdar initiative point towards the Middle East region's inclination towards solar power.

Significant growth potential - Masdar city as an important show case:

The Middle East with its vast amount of sunshine is the ideal place for solar energy. For the Middle East, this would hopefully lead to attractive and soon cost competitive PV-installations for the high electricity demand of air conditioners or desalination plants. The latest report from Bank Sarasin predicts an annual growth rate of more than 50% over the coming five years for this attractive region. The Masdar project is somewhat the spearhead of this new development. It will be the first clean-technology cluster located in a carbon-neutral, zero-waste city powered entirely by renewables, mainly solar power. This new city seeks to become a global centre for innovation, research and product development in the fields of renewable energy and sustainable technologies.

Brief description of the three main solar energy technologies:

Photovoltaics (PV): Generation of electricity from solar energy. In solar cells, which are mostly made from silicon, shining a beam of light on a material releases a positive and negative charge (photoelectric effect), producing an electrical current that can be used to charge a battery or can be fed into the public grid.

Solar collectors: A solar thermal system, or solar heating plant, uses the sun's energy in a relatively simple but highly efficient way. Black coated absorbers in the solar collectors are heated up by the sun's rays. This heat is collected in a storage medium and then fed into the household boiler and heating system.

Concentrating solar power (CSP): CSP plants utilise the heat converted from the sun's radiation to generate electricity. Mirrors are used to concentrate the sun's rays, and the resulting thermal energy is transferred to a steam cycle at temperatures well above 100. As with conventional power stations, the steam is used to power a turbine for generating electricity.

CSP the ideal technology for Middle East:

The introduction of CSP technology in the Middle East should receive a boost from the Desertec project, based on an initiative by German climate researchers and the Club of Rome. A desert area of 360 square kilometres would be enough to cover the entire world's electricity needs. This corresponds to half a percent of all desert areas on the planet. The plan is for CSP plants located in the Sahara to supply up to 15% electricity for the Middle East, the Mediterranean countries and Europe by 2050. This will require investments of EUR400bn.

What is Sarasin's understanding of sustainability as practised in business?

Sarasin defines sustainability in business as the socially responsible production of goods and services with maximum resource efficiency using production methods with a low potential for conflict.

Already in 2009 the existing 485 MW of CSP capacity will be boosted by another 415 MW added to the grid on a global basis. The commissioning of the first plants is very promising. Sarasin's forecast for newly installed capacity up to 2020 assumes an annual growth rate of 20%. This will bring total installed capacity for 2020 to 31.6 GW.

Global outlook bright for 2010:

In the PV industry the most important factors driving the recovery are cost savings, lower module prices, efficiency improvements and the expansion of marketing channels. The growth rate for the global PV market is already expected to reach 46% in 2010. This corresponds to newly installed PV capacity of 8.5 GW. Annual growth rates for the period up to 2012 are between 45 and 50%. Non-European markets are expected to achieve higher than average growth: China above 130%, and India and the USA both in the region of 100% p.a.

One guarantee for stable growth is the fact that in addition to the pioneer markets, at least ten new PV markets with an annual volume of 500 MW will emerge in the next two years. This will help solar energy wean itself off state subsidy programmes and at the same time quickly achieve grid parity. Based on economic arguments and the associated favourable prospects for the PV industry, Bank Sarasin predicts that the global market volume will expand to 155 GW by 2020. Its long-term forecast is therefore slightly more optimistic than the politically-driven scenario put forward by the EPIA (European PV Industry Association).

This projection is not based on the prospect of greater political support, but is founded on the growing economic arguments in favour of solar energy. CSP plants are also receiving a boost from the implementation of large-scale projects, such as Desertec in the Sahara.

In addition, the expansion of decentralised solar energy generation in Central Europe continues, along with standalone PV systems in southern countries. Of all the solar technologies, solar collectors have made the biggest energy contribution in recent years.