As No. 1 global solar market Germany ratchets down subsidies for solar power this year, investors looking for the next hot market for the renewable energy source should be eyeing India, according to a report by Lux Research.
The report, released on Wednesday, looked at the growth potential of 15 emerging solar markets and found that India has massive potential because of government subsidies, a need for distributed generation and increasing energy demands.
"India comes away as by far the most attractive market for long term growth out of these that we looked at," said Jason Eckstein, a Lux Research analyst and the report's lead author.
Under its Solar Mission plan, unveiled last year, India is poised to add 20 gigawatts of solar power by 2022.
The plan favors domestic manufacturers of crystalline silicon solar modules, including Moser Baer and Tata BP Solar, a joint venture of Tata Power Co Ltd and BP.
In the United States, First Solar Inc is poised to benefit from India's adoption of solar power because its solar panels are made of cadmium telluride and are not subject to the domestic content requirement.
Markets that could grow rapidly this year include Cyprus, Israel and Malaysia because of government subsidies, according to the report. Those markets are unlikely to be "the next Germany," however, because of their small size.
The report said South Africa and the United Kingdom were potentially strong markets because of government support for solar power.
Russia, Brazil and Mexico were identified in the report as potentially large solar markets even though they do not have solar incentives. "They have ... a lot of room to grow, more rural populations and in some cases a real threat to their domestic energy supply," Eckstein said.