Half of all solar panels made this year won’t be installed in 2009!

EL SEGUNDO, USA: How bad is the solar panel glut?

* So bad that nearly half of all panels made this year won’t be sold in 2009.
* So bad that the present massive oversupply of panels will persist until 2012.
* So bad that iSuppli Corp. is now reducing its forecast for solar panel production out to the year 2013.

“The solar industry in 2009 has been undermined by collapse in demand due to the decision by Spain—which accounted for 50 percent of worldwide installations in 2008—to change its feed-in-tariff policies,” said Henning Wicht, senior director and principal analyst for photovoltaics at iSuppli.

“This demand drop led to a massive buildup of inventory throughout the supply chain, from the raw material polysilicon, to PV cells, to complete solar systems. Despite this, solar panel makers have continued to increase capacity and production, exacerbating the inventory buildup.”

Total solar panel production in 2009 will grow by 14.3 percent to 7.5 Gigawatts (GW), up from 6.5GW in 2008. However, only 3.9 GW worth of installations will take place this year. That means that almost one out of every two panels produced in 2009 will not be installed but stored in inventory.

“This inventory glut will have a long-term impact on the solar business, with panels set to remain in a state of oversupply until 2012,” Wicht said. “After that year, fast-growing demand for solar installations will be able to absorb global panel production and inventory.

iSuppli’s updated forecast now shows supplier production flattening for the years from 2011 through 2013 compared to the old forecast.”

The figure presents iSuppli’s previous and updated forecasts for solar panel production in terms of GW.

iSuppli: Previous and Current Global Solar Panel Production Forecasts in Gigawatts (Crystalline and Thin Film)Source: iSuppli Aug. 2009

Still ramping?
Despite the global economic recession, most of the leading producers of solar panels -— such as Suntech, Sharp and JA Solar -— will continue to grow in concert with the overall PV industry, although they have no intention of slowing production of cells and panels.

“Even in the face of the downturn, many panel and cell producers have continued to ramp up their capacities as if a recession had never occurred,” Wicht said. “Most companies are doing this in order to maintain their share in the market.”

As a result, Suntech will push Q-Cells aside and become the No.-1 producer of crystalline cells in 2009, iSuppli predicts. Sharp, Yingli and JA Solar also will defend their Top-5 positions this year by not reducing their solar-cell production increases.

Those suppliers that have reduced or made adjustments to their production of cells and panels as a result of the softening demand have seen their short- and mid-term strategies falter. These suppliers include Q-Cells, SunPower and BP Solar.

Q-Cells, in particular, slowed down cell and panel expansion at its plant in Malaysia and has significantly reduced production targets in 2009. Likewise, SunPower has cut back its plans for expansion, while BP Solar has closed its panel production operations in Malaysia and Spain.

So, while some companies are hiking up production in order to maintain their positions in the market, others are forced to undertake short-term production cuts and delay or even cancel long-term expansion projects.

Beginning of the end for fossil fuels and nuclear?

EL SEGUNDO, USA: In what iSuppli Corp. believes could mark the beginning of the end of the use of fossil fuel and nuclear technologies for electrical generation, the world’s largest re-insurance company has announced an unprecedented effort to invest billions of euros in solar power plants in North Africa.

The Desertec project, sponsored by Germany’s Munich Re, plans to invest 400 billion euros to build solar power plants in the North African Sunbelt, located in the Sahara Desert region.

The effort will utilize Concentrating Solar Thermal Power (CSP) plants to generate electricity and will establish an upgraded electrical grid in the Mediterranean countries. The project will be built during the next 10 years.

Munich Re, Siemens, Deutsche Bank and RWE are partnering in the project, and more than 15 other companies are being invited to join the consortium.

“Beyond the major impact of Desertec itself, the project is set to spur a new wave of other solar power plants and projects, iSuppli predicts, marking a historic shift from traditional electrical-generation techniques to solar power,” said Henning Wicht, senior director and principal analyst for photovoltaics at iSuppli.

“Desertec represents a number of milestones in the history of the solar business. For one, it marks the first time that private companies will invest in a long-term renewable-energy endeavor of such vast size.

Furthermore, leading companies have never undertaken such major risks to invest in a relatively new technology amid an uncertain political environment and missing infrastructure.

“Finally, insurance companies traditionally have been risk-averse investors. The participation of Munich Re provides priceless value and credibility for future renewable-energy projects,” Wicht said.

“Because of these factors, Desertec is likely to be followed by other initiatives. iSuppli expects China will move quickly on similar projects because of its eagerness not to miss out on the future of the renewable energy business.”

The private companies funding Desertec expect an attractive margin by producing and selling electricity from the desert. The Wuppertal Institut of Energy concluded in a study sponsored by Greenpeace that by 2050, the CSP industry will generate about 2,000 billion euros in revenue and will create 600,000 new jobs worldwide.

This means that the CSP industry will be able to offer as many jobs as the German automotive industry does today.

A large portion of the equipment for the North African power plants will be delivered by the German solar industry.

Leading suppliers for the Desertec project will include:
· Flabeg and Schott Solar, which supply CSP systems.
· Siemens, which offers steam generation turbines.
· MAN Ferrostaal and Solar Millennium, which are experienced project developers for concentrated solar power systems.

Aside from this milestone for CSP plants, iSuppli believes that Photovoltaic (PV) and concentrated PV systems will complement the technology mix of Desertec. PV is well suited for situations in which no water can be found to generate steam to run the solar thermal power plants.

The next date to watch for the Desertec project is mid-July—when the industrial partners meet again to formerly announce the consortium. iSuppli will be reporting this development from Munich.

Will grid parity change everything for solar industry?

EL SEGUNDO, USA: Many in the solar power industry and the investment community believe the arrival of grid parity—the point when cost of electricity generated by a rooftop photovoltaic (PV) cell system is equivalent to that purchased from an electrical utility—will mark a major inflection point for the market that will deliver a huge increase in growth.

However, even when true grid parity arrives, it’s unlikely to generate an abrupt rise in solar system installations due to the high upfront costs and the long-term return of investing in a rooftop photovoltaic system, according to iSuppli Corp. In fact, growth is set to moderate during the years when grid parity arrives for various regions of the world as the industry enters a more mature phase.

Following a dip in growth in 2009, photovoltaic installations measured in terms of megawatts are expected to rise at a Compound Annual Growth Rate (CAGR) of 72.4 percent from 2010 to 2013. During the period from 2010 to 2020, when grid parity is expected to arrive in many nations that are leading in solar-energy installations, the CAGR will slow to 20 percent.

Parity apparent
While there are many definitions of grid parity, iSuppli characterizes it as the point when an investment in a rooftop solar system delivers a 100 percent return on investment in five years. Furthermore, debts incurred, i.e. negative cash balance in the investment in the system—must never exceed 25 percent of the total cost of the installation.

“iSuppli doesn’t expect the arrival of grid parity to result in an abrupt increase in user demand for photovoltaic systems,” said Dr. Henning Wicht, senior director and principal analyst for iSuppli.

“The market is likely to make a smooth transition, with demand progressing through the arrival of grid parity in an evolutionary way. This is because users must still make an investment in advance and the wait for the return over a long period of time. A lot of this has to do with psychology. It takes a high level of commitment to invest in a solar system that is expected to operate during a period of 30 years.”

Because of this, global PV installations are expected to rise in smooth fashion, even when grid parity arrives in certain nations of the world. The major factor determining the growth of PV installations will be the supply/demand balance, which will dictate pricing.

Solar market to recover from Spanish flu
Global PV installations are expected to decline by 32.3 percent in 2009 to reach 3,546 megawatts, down from 5,235 in 2008. However, the 2009 decline is due to a single event: a sharp decline in expected PV installations in Spain.

Spain accounted for 50 percent of worldwide PV installations in 2008. An artificial demand surge had been created in Spain as the time approached when the country’s feed-in-tariff rate was set to drop and a new cap of 500 Megawatts loomed for projects qualifying for the above-market tariff. This set a well-defined deadline for growth in the Spanish market in 2009.

However, megawatt installations will rebound in 2010 with growth of 42.5 percent, followed by a 73.6 percent rise in 2012 and a 68.6 percent increase in 2013.

The figure presents iSuppli’s forecast of worldwide photovoltaic system installations in terms of megawatts.Source: iSuppli, June 2009

Waiting for parity
Different countries are expected to attain grid parity at different times, due to varying factors including sun exposure and the cost of utility-provided electricity.

“The country that is probably closest to reaching this standard is Italy,” Wicht said. “Italy has high electricity rates, and low system prices. It also has a high exposure to solar radiation.

However, even in this nation, the elapsed time to the cash break-even point is now about 14 years. Furthermore, debt for a system installed now will reach 35 percent of the net system price.”

iSuppli doesn’t expect the nation’s solar industry to achieve grid parity until 2012.

The next closest nation to reaching grid parity is Germany due to the high cost of electricity and the availability of low-cost solar systems in the nation. However, Germany is not set to achieve grid parity until 2018, according to iSuppli’s definition.

California may already have achieved grid parity if consumers are paying the premium of 35 cents per kilowatt hour. However, this kind of grid parity addresses only a small fraction of the state’s consumers. Grid parity addressing the majority of private household and reaching electricity prices of 22 cents per kilowatt hour are likely to be achieved in four to five years.

However, these events are not likely to spur a major rise in solar installations.

“The definition of Grid parity is imprecise, making it easy to call it the holy grail for solar,” Wicht added. “As solar system prices will continue drop and public incentives will allow to obtain Return on investment of 5 to 10 percent over 20 years, Solar Penetration will rise like any other market, with early adopters and late adopters. The market is at an early stage in terms of penetration. Penetration of solar systems will progress like any other market.”

Will solar downturn lead to more mature PV industry?

The severe downturn in the global Photovoltaic (PV) market in 2009 actually could have a positive outcome for the worldwide solar industry, yielding a more mature and orderly supply chain when growth returns, according to iSuppli Corp.

Worldwide installations of PV systems will decline to 3.5 Gigawatts (GW) in 2009, down 32 percent from 5.2GW in 2008. With the average price per solar watt declining by 12 percent in 2009, global revenue generated by PV system installations will plunge by 40.2 percent to $18.2 billion, down from $30.5 billion in 2008.

The figures present iSuppli’s forecasts of global PV installations in terms of gigawatts and revenue.

Fig 1: Global Photovoltaic System Installation Forecast in Megawatts, 2008-2013Source: iSuppli, April 2009

“For years, the PV industry enjoyed vigorous double-digit annual growth in the 40 percent range, spurring a wild-west mentality among market participants,” said Dr. Henning Wicht, senior director and principal analyst for iSuppli. “An ever-rising flood of market participants attempted to capitalize on this growth, all hoping to claim a 10 percent share of market revenue by throwing more production capacity into the market. This overproduction situation, along with a decline in demand, will lead to the sharp, unprecedented fall in PV industry revenue in 2009.”

However, the 2009 PV downturn, like the PC shakeout of the mid 1980s, is likely to change the current market paradigm, cutting down on industry excesses and leading to a more mature market in 2010 and beyond.

Fig 2: Global Revenues Generated by Photovoltaic Installations 2008-2013 in Millions of US DollarsSource: iSuppli, April 2009

“The number of new suppliers entering and competing in the PV supply chain will decelerate and the rate of new capacity additions will slow, bringing a better balance between supply and demand in the future,” Wicht said.

Blame it on Spain
The single event most responsible for the 2009 PV market slowdown was a sharp decline in expected PV installations in Spain. Spain accounted for 50 percent of worldwide installations in 2008. An artificial demand surge had been created in Spain as the time approached when the country’s feed-in-tariff rate was set to drop and a new cap of 500 Megawatts (MW) loomed for projects qualifying for the above-market tariff. This set a well-defined deadline for growth in the Spanish market in 2009 and 2010.

While the Spanish situation is spurring a surge in excess inventory and falling prices for solar cells and systems, this will not stimulate sufficient demand to compensate for the lost sales in 2009. Even new and upgraded incentives for solar installations from nations including the United States and Japan—and attractive investment conditions in France, Italy, the Czech Republic, Greece and other countries—cannot compensate for the Spanish whiplash in 2009.

The Spanish impact will continue into 2010, restraining global revenue growth to 29.2 percent for the year. Beyond Spain, the PV market is being adversely impacted by the credit crunch.

“Power production investors and commercial entities are at least partially dependent upon debt financing,” Wicht noted. “Starting in the first quarter of 2009, many large and medium solar-installation projects went on hold as they awaited a thaw in bank credit flows.”

After the fall
After 2010, the fundamental drivers of PV demand will reassert themselves, bringing a 57.8 percent increase in revenue in 2011 and similar growth rates in 2012 and 2013.

“PV remains attractive because it continues to demonstrate a favorable Return on Investment (RoI),” Wicht said. “Furthermore, government incentives in the form of above-market feed-in-tariffs and tax breaks will remain in place, making the RoI equations viable through 2012. Cost reductions will lead to attractive RoI and payback periods even without governmental help after 2012.”

Furthermore, lower system prices will open up new markets by lowering incentives and subvention costs. The lower the PV system prices are, the lower the incentives will have to be. Developing regions will be big the beneficiaries of these lower prices and thus will grow faster than the global average, Wicht said.

Source: iSuppli, USA

Dramatic price forecast to reshape PV industry: iSuppli

I was very fortunate to attend a webinar on solar PV a couple of days back, thanks to iSuppli, USA. The webinar looked at:

* Polysilicon -- what is going on in the market?
* Cells and modules -- where will the prices go?

Dr. Henning Wicht, senior director and principal analyst, iSuppli, made it clear that the intention was to show what's coming out of primary industry research.

He said: "We believe that solar is a fantastic market. It has been growing over the last four years by revenue. It will continue to grow! There are not many industries with a growth path like that! However, in last the 18 months, the supply has been disconnected from demand."

This is exactly the point iSuppli addressed in its webinar. Dr. Wicht was accompanied by Stefan de Haan, senior analyst, photovoltaics, iSuppli.

iSuppli's recent findings are:
* Severe supply chain imbalances exist at polysilicon/wafer and cell/module levels.
* Short term polysilicon and module prices will decrease significantly.

Polysilicon: What's going on with supply and pricing?
If you looked at the global solar PV industry, many plants are under construction, and there are huge capacity expansion plans. There has been a dramatic decrease in production. In 2008, iSuppli estimated total production of solar PV at 60,000 metric tons. In 2009, about 100,000 metric tons will be produced!

What are the reasons for this supply situation? In 2005-06, the high margins of this industry attracted several newcomers. The cycle time to ramp up a polysilicon plant is 24-36 months, and including another 12 months to get finance, it takes about four years.

He said: "The decisions taken in year 2005-06 are coming to the market now. This is also why we see the big ramp in 2009-10. This is also the reason why the industry will have big difficulties to react on a short term notice. The polysilicon industry is a big super tanker, which has difficulties to maneuver on short term."

Looking at the demand side of things, iSuppli showed a graph where the two curves -- polysilicon supply and polysilicon demand meet, or rather cross, in early 2010. From that point on, the supply line passes the demand line. "That means, from that time onward, we definitely see prices for polysilicon decreasing," he said.

What will happen in 2009?
The key point to note is that the ramping rates of polysilicon and solar cells are completely different! The ramping rate of polysilicon is much steeper, than on the cell side. Polysilicon is more than doubling, while the cell industry is growing at 34 percent.

According to Dr. Wicht, the gap between demand and supply is already shrinking fast in 2009, which will lead to a price decrease in 2009.

Coming to prices, the polysilicon market boasts two kinds of prices -- long term and spot market. According to Dr. Wicht, the long term prices are already decreasing from around $100/kg in 2008, and it is expected to be around $80/kg in 2009.

On the other hand, the spot market price peaked in 2008 at around $400/kg. Now, it has already dropped. It will continue to drop, far beyond today's long term contract price, which will then, from 2010 onward, make up another round of discussion. This is because companies might tend to get out of their long term contracts to secure their silicon on the spot!

Summarizing, he said that polysilicon production will increase heavily. Next, supply will pass demand from 2010 onward, and then the industry will enter the oversupply situation for the next three to four years. The polysilicon industry will also react. In fact, iSuppli anticipates a recent announcement from a solar PV company to expand production capacity would be the last for quite a while!

What about projects on the way? These projects have to come on to the market and many of those will! This is precisely the reason why the industry will see silicon passing solar cells in capacity over the next few years.

Stefan de Haan added that the output of the PV modules industry will grow. The total module prod will likely grow to 11GW this year and to 20GW in 2012. Thin film modules will continuously gain market share and it probably account for 1/3rd of the total market by 2012. Production of crystalline cells will run in parallel. It is likely to reach 9GW for 2009 and 18GW for 2012.

Commenting on the competitive landscape, he added that many new players would be entering production in 2009, especially in the thin film business. "However, the current leaders -- QCells, Suntech and First Solar -- will increase their edge over the competition in terms of absolute production volumes," he said.

In general, it is a good thing that the industry is growing and that all of this capacity is coming online. However, this raises the question: can demand can keep up with the supply?

According to iSuppli, in 2009, the installation market will be flattening. In the sense, iSuppli projects that 4.2GW will be installed this year, or about 10 percent growth. However, this growth is much smaller in comparison to the previous years. Some of the reasons for slower growth in 2009 include changes in sustained feed-in tariffs and the global economic slowdown.

Hann added, "In H2-2010, module demand will probably return to the previous growth rates, of more than 20 percent per year."

Combining demand and supply, there is a massive oversupply of modules that has already been building up since early 2008. Back in 2008, this did not impact on the module prices as there was short term heavy demand from countries like Germany and Spain, from project developers and installation companies, etc. So, this was not noticeable earlier. However, in 2009, the oversupply situation is quite serious!

As a consequence, many suppliers will not be able to react to this situation in the short term. They will still need to run their factories to try and generate some revenue and satisfy the industry. Many had bet on some strong demand coming from USA and also China.

This year, the module prices will decline. Consequently, the declining prices will also create some additional demand. However, for the next two years, this fundamental oversupply situation will not change.

How far will prices drop?
So, what are the message for 2009? First, crystalline module prices will drop to about $2.50 per watt, and second, cost is going to be the differentiating factor! This was a point emphasized strongly by the iSuppli analysts.

Further, how should companies manage this situation, where supply is disconnected by demand? According to Dr. Wicht, there is 11.1GW of module supply vs. 4.2GW of installations. "We do not see that the demand is elastic and that everything will be good after the end of 2009. The gap is too large between demand and supply, and will last till end of 2010."

Installation capacity will surely become a bottleneck. There will be falling prices for silicon, as well as solar cells and modules. Also, the demand is not that elastic enough to absorb all modules produced.

Therefore, given this situation, what are the options for success, rather, what are the ideas to re-orient the solar PV business?

The first option could be to shut down 50 percent of production till price recovers. However, this is not a realistic option. Another could be to put expansion plans on hold. Yet another option for producers would be to become the best in class in production cost, an option, which is excellent, but difficult!

Probably, the best option would be for makers to integrate downstream. This includes new demand simulation in established markets as well as developing new markets.

Dr. Wicht said: "Anticipating bottlenecks are key for solar. The next bottlenecks are the bureaucracy and installation capacity. The production capacity would not be influential. Production cost and downstream integration are key." He advised solar PV producers to monitor their PV market demand and supply situation regularly.

Outlook for solar photovoltaics in 2009!

Friends and dear readers, this is my last blog post for 2008! Indeed, what a year this has been!!

Let me bid this year goodbye with a general outlook on the global solar photovoltaics industry for 2009.

iSuppli had recently put out a report on solar eclipse coming in 2009! I had blogged about the possible solar sunburn ahead, as well, earlier last week!

Another point that has interested me is: what happens to the top 20 global solar photovoltaic companies, based on iSuppli's analysis! This blog post has perhaps been the most popular in recent times.

I was very lucky to re-associate with Dr. Henning Wicht, Senior Director, Principal Analyst, iSuppli Deutschland GmbH, in Munich, Germany, for this discussion, thanks to the efforts of Jon Cassell and Debra Jaramilla!

How bad is solar?
The first and the most obvious question: how bad is the global solar market right now and why?

According to iSuppli, bringing an end to eight consecutive years of growth, global revenue for photovoltaic (PV), panels is likely to plunge by nearly 20 percent in 2009, as a massive oversupply causes prices to drop!

Worldwide revenue from shipments of panels will decline to $12.9 billion in 2009, down 19.1 percent from $15.9 billion in 2008. A drop of this magnitude has not occurred in the last 10 years and likely has not happened in the entire history of the solar industry.

Dr. Henning Wicht says that the upstream part of the solar business (cell, module, etc.) will suffer from price decline due to strong oversupply. The downstream side will benefit (installation, end-user, investor, etc.) by lower system prices.

Therefore, what can the solar players do to get over this coming bad phase in 2009? Well, three things: improve the cost structure, improve the sales side, and diversify downstream… These points hold strong for all fully integrated and non-integrated solar panel suppliers as well. By the way, fully integrated solar panel suppliers are likely to suffer less severe losses than non-integrated competitors.

There must be some way around to to bring about some balance within the current imbalance in the demand and supply situation. While Dr. Wicht agrees this is a difficult one to answer this early, he adds that supply and demand are diverging heavily. "With the current trajectories even in 2012, 100 percent more modules are produced than installed," he says. I promise to discuss this question again with the good Dr. in another six months time.

Word of wisdom
There are various support programs in place, and it is important to know whether they will continue to remain beneficial, both to support markets to become independent sustainable and to develop the regional industry.

Dr. Wicht believes the support programs are still required and beneficial. "If China, India, Mexico and other sunny regions would start to support solar installations, that could change the picture drastically," he notes.

A note of warning for new entrants in the solar photovoltaic space! Be aware that this warning has been earlier highlighted in the global semiconductor outlook for 2009! In tune with what the various analysts have maintained earlier, iSuppli also forsees newcomers in the solar photovoltaic line having problems in getting the required credit for their projects.

What next for Europe, emerging regions?
According to iSuppli, the short-term boost in demand from Spain and Germany has kept the installation companies busy, and solar orders and module prices high. But this boom is over. So, what's next for European players?

According to Dr. Wicht, Germany and Spain should continue their leading role as solar installation regions, even after the boom. France, Italy and Czech Republic are attractive, but still much smaller markets, he maintains.

iSuppli has also mentioned that the race to larger manufacturing scale comes to an end when the production is not sold anymore! In that case, what's the case for the emerging nations, like China and India? Aren't there buyers in such places?

Dr. Wicht says: "Demand in the traditional solar markets is not elastic enough to absorb all of the solar production. Potential new markets, for example, China and India, do not yet have installation capacities and administration to significantly change the global solar demand short term."

iSuppli also feels that the newer Chinese and Taiwanese suppliers will be hit particularly hard during 2009. The reason being, many suppliers have expanded their production capacities heavily without securing equally the sales/downstream part.

Global top 20 rankings to change?
Now to the most interesting part! Most of you have read about the top 20 global solar photovoltaic suppliers. Following the iSuppli warning of a 'solar eclipse' in 2009, there is every likelihood that there will be changes in that table!

Dr. Wicht adds, "However, the top 10 companies are typically better placed than the competition regarding their cost structures, downstream integration and vertical integration."

Obama's solar plans!
Now on to yet other interesting point! The US President-elect, Barack Obama's, New Energy for America plan could well have a significant impact on the US solar industry.

The plan's provisions include:

• A federal renewable portfolio standard (RPS) that requires 10 percent of electricity consumed in the US to come from renewable sources by 2012.
• A $150 billion investment over 10 years in research, technology demonstration and commercial deployment of clean energy technology.
• Extension of production tax credits for five years to encourage renewable energy production.
• A cap-and-trade system of carbon credits to provide an incentive for businesses to reduce greenhouse gas emissions.

Dr. Wicht says: "We all know that Obama is in favor of renewable energy. However, he will not change a 160 percent oversupply of solar panels in 2009."

Bumpy ride to grid parity?
On another note, and a pretty favorite one: Is it going to be a "bumpy road" to grid parity? How will the subsidies be kept going?

Dr. Wicht notes: "Subsidies will continue. It will always be a bumby road because the ramping cycles differ heavily among silicon, cells, modules and the installation capacity. Please remember that the installation business will now benefit from low module prices. It will recover some of the margins it has lost in the last years due to high module prices."

Also, up to when will polysilicon constraints last? iSuppli had earlier indicated PV strategy changes. According to Dr. Wicht, the polysilicon prices are coming down already. "Our indication from October 2008 seems to be fairly good," he says.

Lastly, will iSuppli be still sticking by solar, semicon investments being equal by 2010?

Dr. Wicht says: "Please let me cite again our interview in October: The investments for solar production raising up to several hundreds of Mio USD, up to 1 Bio $ per production site. That is coming close to a semiconductor fab. The total capex of semiconductor is still 10 times larger than PV. However, PV is rising much faster."

That will be all for this year, folks!

Look forward to sharing much more captivating moments in semiconductors, electronics, solar photovoltaics, telecom, etc., in 2009!

Wishing all of you a very happy, prosperous and successful 2009. Be safe and look after yourself! See you next year!! :)

Top 20 global solar photovoltaic companies

Alright folks! This has taken some time coming, but it is worth the wait! Presenting the Top 20 solar photovoltaic companies during Q1-2008. May I add here that I am extremely grateful to iSuppli's Jon Cassell for giving me this opportunity.

I was also fortunate enough to discuss this table with Dr. Henning Wicht, Senior Director, Principal Analyst, iSuppli Deutschland GmbH, in Munich, Germany.

Parameters for rankings
First up, what were the parameters used by iSuppli to determine the top 20? According to Dr. Wicht, the top 20 cell-companies have been ranked by production in 2007 and by announced production capacity 2010. He clarified, "Ranking by revenue is not applicable because many integrated manufactures publish compound revenues for cells, modules and systems."

Yes, there have been several announcements in the solar/PV space, in India, and globally, and some names could be missing here. However, the new cell manufacturing projects will be included as soon as they are announced.

Coming back to the topic, it is necessary to examine the role of subsidies. While photovoltaics have been getting cheaper, Dr. Wicht said that subsidies were still necessary to support the PV markets. "It shows that the time grid parity shortens faster than expected earlier. As an example, for Germany, the grid parity might be achieved in 2015, which is two years earlier than expected in 2007."

That is to say, the support programs are benefical, both to support markets to become independent sustainable and to develop the regional industry.

Global interest in solar/PV
Critically, there seems to have developed a sudden interest in solar/PV, starting late 2007, when this (solar) has been around for some time. How has this happened?

According to Dr. Wicht, raising CO2 levels generated through fossil energy, CO2 certificates, rising prices of fossil fuels, political dependency from oil exporting countries drove the Kyoto protocol to reduce CO2.

"Renewable energy is a major pillar to achieve that goal. European governments have been frontrunners to implement and execute that goal. That said, solar has been around for a while. Japan was the first significant market. However, on a global basis, it took off in Europe from 2005 onward," he noted.

With the spate of initiatives in solar/PV, can it not turn out to be a case of too many folks entering the same line?

Sure, over and undersupply happens along the supply chain! The iSuppli market research figures out imbalances, which drive prices/margins up and down.

Also, isn't there a chance of solar/PV getting commoditized, or has it already become one? Well, PV modules are a commodity product, said the analyst. The market is still in its infancy and it will continue to grow for the next 10 years and further. The overall saturation will come, but still some years to go.

Is solar helping semicon?
Some industry folks have been saying that the solar/PV initiatives are not really helping the overall semicon industry, a statement I agree with as well. Also, it may only be benefitting some of the equipment makers.

Dr. Wicht said: "Indeed, semicon fabs are not able to produce competitively solar cells and the solar need for semiconductor devices is rather low. The semiconductor companies, however diversify into PV, e.g., Qimonda with a new cell production. Intel is investing in several PV companies, LG is investing in Conergy, etc., or supplying devices for power conversion, e.g, National Semiconductor. However, the overall impact on the semicon devices market is rather low!

Solar, semicon on par?
iSuppli made a forecast some time back regarding investments in solar and semiconductors being on par by 2010.

The investments for solar cell production raising up to several hundreds of Mio USD, up to 1 Bio $ per production site. That is coming close to a semiconductor fab. The total capex of semiconductor is still 10 times larger than PV. However, PV is rising much faster.