The solar industry faced oversupply problems that caused significant price drops in 2011. Most solar firms faced losses. However, the rapid decrease of cost for solar PV systems induced much new demand. Despite the fact that the solar markets in Europe have been affected by lack of funds due to the debt crisis, the global solar market grew by 17.1% to 24GW in 2011, a ray of sunshine in the seemingly gloomy market.

In 2012, governments in Europe are likely to practice strict control over the incentive programs causing the demand in Germany, Italy and France to face possible contractions. However, the price of solar PV systems has been decreasing, which has been stimulating demand in markets such as Japan, China, India and the US. The rising demand in these markets can effectively make up for the contracting demand in Europe. The financial capital is likely to be available once the global economy settles recent problems in first-half 2012. Digitimes Research predicts the global solar market to grow by 11.9% to 26.9GW in 2012.

The recent capacity expansions taken by the supply chain have been beyond the growth of global demand. Although the global solar market has been growing continuously, the supply chain is likely to continue facing oversupply problems in 2012. Hence, the price of solar products is unlikely to increase. The ongoing low prices of solar products will hit firms with higher costs and firms that lack competitive technologies. Greater China-based solar firms are likely to continue expanding global market share. The supply chain will get rid of the oversupply problem when demand shows strong rebound after 2012.

With lack of confidence in the financial market and oversupply condition across the supply chain, the global solar market still grew in 2011. Italy and Germany markets continued to dominate, together accounting for 50% of the global market share. Nevertheless, the global market share of Europe markets continued to decrease to 65.5% in 2011 due to low demand from markets such as the Czech Republic.

The North America market has great growth potentials. In 2011, the North America market accounted for 9.2% of the global market share. Asia and other newly-developed markets accounted for 18.7% with China being the market that demonstrated the largest growth. China's domestic demand grew significantly in 2011 and has become the third largest solar market in the world.

GT Advanced announces a order of US$101.3 million (January 9) - Company release

Jinko Solar expands into France sun belt (January 10) - Company release

Global PV installations for 2011 could have topped 26GW, say analysts (January 10) - PV-Tech

German solar boom strengthens critics of subsidies (January 9) - Reuters