China is expected to overtake Germany as the largest solar photovoltaic, or PV, consumer in the world in 2013, according to a report from market research institute NPD Solarbuzz.

The report released by the California-based institute on Wednesday said global solar PV demand will increase from 29 gigawatts to 31 gW in 2013, up 7 percent year-on-year. Demand from China will be a strong driving force for the growth.

“2013 will represent another transition year, as the PV industry adjusts to softness across legacy European markets,” said Michael Barker, senior analyst at NPD Solarbuzz. “The Chinese end-market will largely compensate for the downturn in demand from Germany, which previously led PV demand.”

Due to further reductions in European premium incentives, demand in this region will fall to approximately 12 gW, down 26 percent year-on-year.

In contrast, new policies across leading PV countries in the Asia-Pacific region, led by China, Japan, and India, will stimulate regional growth of over 50 percent and account for more than 11 gW of PV demand in 2013, said the report.

Despite the increasing domestic demand, many Chinese solar PV producers are struggling to bring in profits due to the strong competition and the overcapacity in this sector in China.

China is the world's largest solar PV producer with more than half the world's total production. China's production capacity for solar cells is estimated at more than 40 gW a year. About 60 percent of China's $35.8 billion worth of solar panel exports in 2011 was to Europe.