A Cloudy Future
Have economicconditions improved for solar cell manufacturers or just changed in the pastsix months are questions detailed in the report Opportunities in The Solar Market For Crystalline and Thin Film SolarCells, published by The Information Network.
On November 18,2008, they issued a press release entitled “Six Reasons for Cloudy Skies on theSolar Energy Industry”. All six issuespresented cast a partial eclipse of the solar market. Subsequently, a week later we forecast thatthe solar market would drop from 40% growth to 25% growth in 2009. At that time, thoughts of a downturn in theluminous market were considered a heresy and comments to the article reflectedthe attitude of the time - up, up, up!
Six months have goneby and its time to revisit these issues to see if anything has changed from afundamental standpoint. The original issues presented are repeated, along withan update on the current environment:
With oil at $60 abarrel, who cares about alternative energy? It's a short sighted view,but with the credit market crunch, who can get a loan to build solar plantsanyway?
Oil is now $70 abarrel and rising, which to us suggests that people will start rethinkingalternative energy. But the second pointabout the credit market crunch remains. Who can get a loan to build a solar plant anyway?
The high price ofoil in the past year was a catalyst for development in other alternative energysources, not just solar. Advances in wind, geothermal, and hydropower energyare reducing the cost of wind power to a point at which it is becomingcompetitive with traditional energy sources. Nuclear power plants smaller thana garden shed and able to power 20,000 homes will be on sale within five years,say scientists at Los Alamos, the US government laboratory whichdeveloped the first atomic bomb. Among these alternative energy sources,hydropower and nuclear have the lowest carbon footprints (carbon dioxideproduced during operation).
Other alternativeenergy programs have been affected by the downturn. Most serious was the recent announcement byPresident Obama that he was terminating the Yucca Mountainnuclear waste depository. This decision gives nuclear power an uncertainfuture, which may be a benefit to the solar energy.
Spain, a huge buyer of solar, reduced itsincentive program to aid buyers in 2009. In California, a seemingly green state, Prop. 7was defeated in the November election with a whopping 65% of the voters sayingNO. One reason: electricity consumers would pay 10% above market rates forrenewable power forever.
Spain has not resumed its incentive program andwill subsidize just 500 megawatts of solar projects this year, down sharply from2,400 megawatts in 2008. Mainland China'sstimulus and now Taiwan'sincentives (we suspect money coming in from Mainland China)will counter the downturn in Spainand Germany.
The spot marketprice of 6-inch solar-grade wafers have fallen to $9 from a high of $12.50 inSeptember. This bodes poorly for thin film makers and equipment suppliers. Thethin film solar panel market and hence the equipment market grew stronglybecause of the shortage of polysilicon. Now that polysilicon is abundant andlower priced, why make thin film panels with 8% efficiency when you get 16+%efficiency with silicon wafers?
The spot marketprice of 6-inch solar-grade wafers has now dropped to below US$3.50 perunit. Winners are the environment andpolysilicon solar manufacturers. Losersare the thin film solar manufacturers unless they can achieve a way ofincreasing efficiency, such as a thin film nano coating being developed bySolarPA in Pennsylvania.
Utilization is atonly 56%. Our analysis of 103 solar manufacturers shows that panel productioncapacity in 2009 will be 15 GW whereas only 8.3 GW will be sold.
Utilization has notworsened as solar companies are struggling to sell products and new capacityhas been put on hold, particularly in Asia. While polysilicon prices have dropped, solarcell manufacturers are also experiencing a 25% drop in revenues in 2009 fromlast year. The drop in solar cell pricesto below $1.50 per watt is not increasing demand, which we forecast last year.
The dollar hasappreciated strongly against the euro by nearly 25%. Germany is the world's largest PVmarket. US solar companies have had to adjust selling prices to generate sales,reducing profit margins.
On November 18,2008, 1 Euro was equal to US$1.269. OnJune 15, 2009, 1 Euro was equal to US$1.385, an appreciation in the Euro of9%. Large, but insignificant in light ofthe overall economic issues currently facing Europe.In the past six months we have seen somewhat ofa stabilization in the worldwide economies and the share prices of solarcompanies ramp in recent weeks. Infundamental terms, while there have been changes in these 6 issues, there areno overriding factors to change our forecast of a downturn in the solarindustry through 2009 with demand resuming in 2010 back to a 40% growth weprojected last year.
