Favourable government policies are spurring investment in solar power projects in Asia, according to market analyst Frost & Sullivan.

Countries such as Thailand, Indonesia, Japan, the Philippines and Malaysia are starting to see large-scale investments in solar power and are also attracting the attention of USA- and European-based manufacturers, says Frost & Sullivan.

The UK-based firm believes that the Asia-Pacific solar market will earn revenues of $11.11 billion in 2016, up from $7.6 billion in 2011. Incentives such as feed-in tariffs (FITs) are helping to drive the market.

In Japan, the launch of a FIT scheme is expected to help the solar market grow at 20 per cent in 2012. “Meanwhile, FIT in Thailand enables people in remote areas to participate in electricity generation from renewable sources,” said Frost research analyst Subha Krishnan.

In 2011, photovoltaic (PV) power garnered 99.6 per cent of the market revenue. Japan, South Korea, Australia, Malaysia, Thailand, Singapore, the Philippines, Taiwan, and Vietnam are vigorously implementing policies for the development of PV.

The year-on-year drop in solar panel prices, particularly the 60 per cent slash in 2011, has further encouraged PV power installations. Renewable energy proposals lined up for concentrated solar power (CSP) technology have been replaced with PV systems, which are considered less expensive.

The drastic fall in panel prices have also led to heavy losses for several original equipment manufacturers. To avoid bankruptcy, module producers are looking to merge with polysilicon companies or diversify into the upstream or downstream segment of the value chain.

“Focus on better efficiency and productivity is crucial for module producers’ market sustenance, since several low-cost Chinese products are expected to flood the Asia-Pacific market,” concluded Krishnan. “Supply chain participants must develop new technologies that integrate large PVs into flexible and efficient grids to enable these systems to mature into the mainstream.”