Analysts See Solar Bubble, Predict Peak Solar in 2009

Though solar industry revenues are expected to keep growing nicely to 2012, supplies of photovoltaic modules will outpace demand starting next year, which could lead to sharp drops in PV prices and a shake-out among solar companies. Those are the main conclusions of a new study from Lux Research, a firm with offices in New York, Boston, San Francisco, and Amsterdam that provides strategic advice and guidance on emerging technologies.

Lux predicts that manufacturers of solar equipment will see their revenues climb by more than 25 percent per annum in the next few years, with government subsidies in Japan, Germany, and Spain the main driving force. The combined capacity of new solar installations worldwide is expected to be about 3.5 gigawatts this year--roughly the equivalent of building a single, standard-sized nuclear power plant, allowing for the intermittency of solar energy.

At present, PV growth rates are somewhat limited by shortages of crystalline silicon, the most widely used material in solar cells. Though polysilicon will remain in short supply until 2010, demand will shift somewhat to newer technologies, including thin-film photovoltaics, PV concentrators employing higher-grade PV material, and thermal concentrating systems.

Since 1995, 46 start-up solar companies have made initial public offerings, 35 of them in just the last three years. But the number of IPOs dropped in 2007 (perhaps signaling harder times ahead), and there was a 40 percent drop in the total amount of money raised, by comparison with 2006.

Almost every major solar project--including the big photovoltaic roof that Google has installed at its Mountain View headquarters--depends on public subsidies. Lux believes that will continue to be the case at least until 2012, with richer subsidies in countries like India and China supplanting those being reduced or phased out in some of the more highly industrialized nations.

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