New Hampshire, United States [Photovoltaics World magazine] The solar industry has undergone tremendous growth over the last several years: 50%, 41%, 36% and 99% in 2005, 2006, 2007 and 2008, respectively. For 2009, we are forecasting growth to slow down to 30% due to the general economic slowdown and difficulty obtaining financing for solar projects, following the near collapse of the banking system. For 2010 to 2012, we are forecasting 40%, 50% and 50% growth.
With solar energy systems not yet at cost parity with incumbent electrical generation systems, most of this growth has been driven by government subsidies. Even with subsidies and the rapid growth of solar, in 2007, solar energy only accounted for an estimated 0.04% of worldwide electrical power generation. Clearly, the potential for solar energy is huge as solar energy generation costs approach grid parity.
The nearly infinite market that solar energy presents has led to a huge boom in solar energy companies. At IC Knowledge, we have recently begun marketing a database of solar cell producers. Some of our findings are described below.
As fast as the solar market has grown, solar cell production capacity has ramped up even faster, at 60% in 2009–just as growth is slowing to 30%. Furthermore, our analysis indicates that average worldwide utilization for solar plants was 50% in 2007, and increased to 64% in 2008 with the big jump in 2008 demand; however, in 2009, we are forecasting a slowdown in the overall solar market, and based on current solar cell capacity expansion plans, we expect utilization of solar cell manufacturing facilities to fall to an average worldwide utilization of only 41%.
Even as growth in the solar market goes back up in 2010, 2011, and 2012, we expect that utilization rates will recover very slowly, staying at 40% for 2010 and 45% in 2011 before finally recovering to 65% in 2012. Although variable costs are higher and depreciation costs are lower on a relative basis compared to say, semiconductors, such low utilization rates are still a big red flag and suggest that the solar cell-producing segment of the solar supply chain is ripe for consolidation.
One question that this analysis raises is, “where is all of this capacity being built?” The top five countries with respect to solar cell manufacturing capacity for 2008 (i.e., where the solar cells are manufactured) are: China (7.886MW), Germany (2.336MW), Japan (1.960 MW), Taiwan (1.725MW), and the United States (1.245MW).
Instead of looking at capacity by the country where the cells are produced, if we look at where the companies that produce the cells are headquartered, the situation changes somewhat. The United States moves from fifth place to third place when ranking solar cell production capacity on the basis of where companies are headquartered versus where the cells are manufactured. However, in both cases, China has solar cell production capacity approximately three times higher than the next largest country.
It is the phenomenal growth of solar cell manufacturing in China that is really driving the current over-capacity. With polysilicon supply constraints easing and all of this capacity coming on line, we expect that prices will come down and many plants will sit idle for the next few years.
Besides the information discussed above, detailed data about 204 companies and 273 facilities–including cell capacity by year from 2007 to 2012, location, web site, technology, and more–is provided in the Solar Watch database (www.icknowledge.com).