South Africa’s target of building 8.4 gigawatts (GW) of solar photovoltaic (PV) capacity by 2030, combined with the success of its large-scale tendering process in attracting investment to fulfill that goal, positions the country as the most attractive emerging PV market globally, according to analysis by IHS Technology.
South Africa scored 66 out of 100 in the IHS Emerging PV Markets Attractiveness Index for the fourth quarter of 2013, 17 points ahead of the second-most attractive market, Thailand, as presented in the figure attached.
The index ranks the attractiveness of PV markets in emerging countries to investors, developers and manufacturers in four key areas: macroeconomic climate, potential market size, project profitability and pipeline maturity. Among the top five countries in the index, South Africa ranked highest in potential market size, project profitability and pipeline maturity, as shown in the table attached.
“South Africa has consolidated its position as a growth market for PV by cultivating a policy environment stable enough to attract financing from commercial banks,” said Josefin Berg, senior PV analyst at IHS.
According to Berg, Thailand’s position as the second-most attractive emerging market for PV reflects investors’ enthusiasm for the country’s adder scheme, under which the government paid feed-in premiums to solar power producers. But as that program has now been discontinued, replaced with a rooftop feed-in tariff, Thailand is potentially in jeopardy of becoming less attractive to PV investors, Berg said.
Turkey rounds out the top three emerging markets, the result of conditions conducive to the development of PV including soaring power demand and prices, relatively low country risk and established PV incentives. An obstacle to Turkey’s growth, however, is the relative immaturity of its PV pipeline—with projects larger than 1 megawatt (MW) currently at a standstill awaiting the tender of 600 MW of licenses. While IHS sees the potential for the installation of 1 GW of PV capacity in Turkey by 2017, it forecasts a build-out of only 150 MW this year in the country. “Permitting and grid connection contracts remain the main bottleneck in 2014,” Berg said.
The attractiveness rankings by IHS of emerging PV markets, assessed on a quarterly basis, take into account 17 parameters within the mentioned four key areas. The areas are weighted to reflect their relative importance toward PV deployment, with profitability, as determined by power prices and the pull of incentive schemes, deemed the most important factor for near-term attractiveness.
The resulting index gives an indication of those emerging markets where current conditions support near- and mid-term PV growth. Relative positions in the rankings of the emerging markets are subject to fluctuation each quarter as policy schemes evolve and pipelines mature.