Portugal and New Jersey show favourable solar conditions

The relatively small solar markets, Portugal and New Jersey, USA, are showing favourable solar system returns despite other constraints, according to Lux Research.

By Kari Williamson

Portugal is a hot spot for solar investors through 2013, according to Lux Research’s latest Solar Demand Forecaster.

Its steadily rising internal rates of returns (IRR) for the 6 major solar technologies push the country towards an annual market of almost 400 MW in 2016.

“Elsewhere in Europe, high solar potential and favourable IRRs for investors are countered by uncertainty surrounding incentives – which could slow growth moving forward,” says Matt Feinstein, Lux Research Analyst and Leader of the Demand Forecast.

“Italy and Germany will remain the Continent’s most stable markets with returns hovering near 9% and 22% through 2016, respectively, thanks to annual incentive step-downs.”

New Jersey's high Solar Renewable Energy Credit prices pushed IRRs into the 40% range in 2010 and early 2011, but is now beginning to suffer the effects of dramatic oversupply, forcing a collapse in prices with no floor in place.

Other markets

California , which is the largest solar market in the US, will continue to see steady growth thanks to stability and visibility with step-down incentives and recent Renewable Portfolio Standards (RPS) legislation.

India is another market worth watching. With quarterly IRRs sky-rocketing past 20% thanks to the newly introduced National Solar Mission, it could become one of the strongest solar demand markets through 2016 – if subsidies are extended past 2013, as expected.

Top five locations by IRR (Q2'11)

  1. New Jersey
  2. Portugal
  3. Australia
  4. Italy
  5. India

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Photovoltaics (PV)  •  Policy, investment and markets  •  Solar electricity