At the start of photovoltaic technology the primary use was for non-grid purposes, using small cells in stand alone situations. In 1992 non-grid use accounted for as much as 89% of total installed solar PV capacity. By 1996 this had declined to 65% and today the situation has been totally reversed and grid-connected capacity accounted for 87% of the total by the end of 2005.
Global installed capacity has grown at an annual average of 41% (CAGR) for the last five years. The greatest growth is coming in the grid-connected sector, principally distributed generation and the proportion has increased from 80% of installed capacity in grid-connected distributed generation in 2004 to 87% by the end of 2008, with 2% centralised grid connection, totalling 89% grid-connected capacity. The make up of the markets differ quite considerably from country to country. However, in over half of the countries with solar PV installations it is not the case that grid-connected applications predominate. This applies in countries with poor transmission systems and in large countries with many isolated power users.
Solar PV capacity is relatively low in many countries so far but it will grow as the PV market develops into its second phase, broadening out from the leading countries. The solar PV market will follow the development pattern of the wind power market, with fast initial growth in a small number of countries which have governments committed to supporting R&D and incentives for generator and consumer take-up, together with industry commitment. When these markets are well established the next phase is to widen out into new countries, which can now see the results of the technology in the leading countries. They will start by importing technology and plant, and will gradually establish their own manufacturing capability.
The solar manufacturing sector is undergoing profound changes and is in rapid expansion. Manufacture of solar PV cells and modules started with the birth of the technology in the USA. The industry has passed through three phases since its beginning and is now reaching global consolidation. In common with many other new technologies, the industry started with many small companies in the field. These have gradually been whittled down and in the last ten years’ there has been much consolidation in the market.