Solar Demand Will Grow, But Major Oversupply Looms
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The solar energy industry experienced a series of market-changing events in 2009 that redefined the rules of the game and, therefore, altered the competitive landscape, according to a new report from Pike Research.Starting in late 2008, the solar market shifted from supply-constricted to demand-driven within a few quarters due to the plunging price of crystalline silicon cells and modules spurred by falling polysilicon cost, constrained availability of credit, Spain's dramatic demand decline, and the growth of thin-film supply and market share.Although solar demand will experience strong growth this year, these events have had a strong influence on which companies will lead the industry in 2010 - and beyond - and which will face low profit margins and possible consolidation, the report predicts.
"The solar market is now faced with a gross oversupply of modules," says senior analyst Dave Cavanaugh. "The industry is currently supplied by more than 190 cell and module manufacturers, making consolidation of weaker competitors an inevitable outcome."In the meantime, overcapacity and intense competition will create downward pressure for module average selling prices, which will accelerate grid parity for the cost of solar-produced power to the 2013 time frame in many markets, Cavanaugh adds.Pike Research forecasts that worldwide solar demand, driven by lower costs and greater availability of credit, will increase to 10.1 GW this year - a year-over-year increase of almost 43%. Solar market demand will exceed 19 GW by 2013 - a 25% compound annual growth rate from 2010.
This growth is expected to be driven by demand from the U.S., Italy and China, in addition to steady demand from Germany and demand growth in a number of smaller countries.However, excess module supply could easily reach 8.3 GW in 2010, even accounting for reasonable utilization rates and moderate capacity growth, according to the report. This year and beyond, the most important competitive differentiators for successful solar companies will be low cost per watt, module efficiency and moving down the supply chain.
More than 128,000 MW of energy storage are currently attached to the power grid worldwide, and more will be needed if renewable energy sources are to be integrated into the modern electrical grid, according to a recent report from ABI Research.The company forecasts that utility-scale energy storage worldwide will increase to nearly 150 GW by 2015, growing at a compound annual growth rate of 2.6% through the 2010-2015 forecast period."Over the next five years, multiple government-funded demonstration projects worldwide will help advance a number of energy-storage technologies by validating their ability to optimize power," says Larry Fisher, research director at ABI Research.
"These include lithium-ion batteries, molten salt thermal energy storage and lead-carbon batteries. Further, as energy-storage costs decline with increasing production of these technologies - particularly with batteries - costs will be more in line with current sources of energy production, which will boost their acceptance by the utility community.""Over the coming decade, as countries across the globe strive to meet their renewable energy targets, they will come to understand the need for energy-oriented storage," Fisher adds. "However, while such storage will serve to keep power costs low in the long run, each such implementation requires hundreds of millions of dollars to install and test, which will create a near-term rise in end-user electrical rates."
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