By Brent Sauser
Morgan Stanley has conducted extensive research on the global solar market and has published a “Blue Paper” containing their conclusions. CLICK HERE to access the entire Morgan Stanley Blue Paper. This is just one more credible confirmation that the movement toward renewable energy is not only happening in the United States but even more so abroad (i.e. China, Japan, and Europe). The following represents excerpts from the Morgan Stanley Executive Summary:
We have developed a model that calculates solar economics around the world based on local regulatory dynamics and solar conditions.We believe investors can use this analytical framework to better understand solar economics in the context of local regulatory dynamics, solar installation costs, and solar operating conditions. We project combined solar growth for China, Japan, the US, Europe, India, and Brazil of 39 GW per year through 2020, or 47 GW including Rest of World. We expect growth to be heavily driven by China, which we forecast will account for 27% of new demand globally. We are bullish on US demand growth due to improving solar economics.
Project Solar Growth in the United States: 8 GW per year solar growth through 2020, driven by highly supportive net metering rules in 43 states, strong solar conditions in many states, and further solar cost reductions. By 2020, solar will be economic in some US states even without a subsidy. In 43 US states, solar panel owners are allowed to net meter, effectively allowing panel owners to avoid the entire utility bill (both the portion associated with fixed grid costs and that associated with actual power generation). Given rapidly declining solar costs and rising utility bills, we believe solar growth potential is well above market expectations, even under our base case assumption in which the 30% Investment Tax Credit (ITC) steps down to 10% and the net metering rules are changed so solar customers must pay 50% of the typical fixed grid costs that a utility customer pays.
Rooftop solar should be a major driver of growth in solar demand. While large-scale solar projects will continue to be an important source of growth for the industry in certain parts of the world, we see a global trend towards greater “distributed generation” in the form of rooftop solar, both on residences and on commercial buildings. . . .