SolarPlaza

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Compared with 2008, do you expect growth in the global market volume of newly installed PV power in 2009?
Based on economic and incentive conditions, I think the global market will be down slightly from 2008. Moreover, since module prices will decline substantially, I think global value of shipments will be down even more significantly. Here in the U.S. expected demand seems to be weighted to the second half of the year, and if that demand doesn’t materialize then there will be a lot of disappointments in 2009.

What will your company be able to achieve in 2009?
Most crystal ball projections for 2009 are very blurry — because of economic conditions we all have limited visibility. Nevertheless, for Akeena our residential sales continue at a good pace, although commercial sales are down. Most importantly, our introduction of highly differentiated Andalay AC solar panels to solar installers throughout the U.S. represents a very big growth opportunity. While other module companies compete based solely on price, Andalay AC panels compete based on providing superior value to installers, industry-leading aesthetics, and safer AC operation.

What module price development do you expect for this and next year?
We expect average module prices to decline 30% from 2008 to 2009, with another reduction of 25% from 2009 to 2010. Keep in mind that the 30% decline from 2008 to 2009 just brings us to the price range we were paying in early 2004. With the vast increase in scale and efficient new producers there’s no doubt that prices in the $1.50/watt range for quality crystalline modules are on the near term horizon.

It’s just as important to look at installation costs and BOS. We see at least a 50% reduction in these costs as installation technology improves (modules with built-in racking, wiring and grounding have no distinct “BOS”) and we make the transition from complicated DC systems to plug and play AC systems. Integrated racking and microinverters make it possible for almost any roofer or electrician to get into the solar installation business — and these new distribution channels will have a very big impact on reductions in total installed costs.

Where and when do you expect to see grid parity first?
It’s important to make a distinction between utility grid parity and retail grid parity. We’re a residential and commercial installer, so in many of the markets we serve we are already substantially below retail grid costs. Current $7/watt costs with the 30% ITC works out to about $0.11/kwh — about the average in the U.S. When installed costs get down to $3.50 in about a year ($2.50/watt for modules and inverters, $1/watt for everything else), solar costs will be less than $0.06/kwh. When solar electricity is half the price of grid electricity demand will skyrocket. Applying local incentives to offset these costs will accelerate the market even further. Being more specific, markets in the U.S. where electricity is expensive (California, Hawaii, northeast states), and places where there is a lot of sun (Arizona, New Mexico, Texas) will achieve grid parity first.
- There will be an initial burst of enthusiasm for utility grid parity as large solar farms are built, but I expect that when ratepayers realize that — because of transmission and distribution costs — this centralized solar power is no cheaper than fossil fuels, there will be renewed enthusiasm for distributed generation solar.

What are the major threats to the solar industry at the moment?
The ghosts of presidents past.

What do you see as the most important market segments for thin-film products in the near future?
Until efficiencies get closer to the 15% of crystalline, the best market segments are ground mount installations. Higher efficiency crystalline has a clear advantage on space-constrained sunny rooftops.

Do you foresee thin-film module prices dropping to $ 1/Wp in two years, and, if so, won’t the major markets be China, USA and India?
I’ve seen studies that indicate that BOS and installation costs are $0.50/watt higher for thin film. Therefore, thin film prices will have to drop this low otherwise they cannot compete with crystalline modules at $1.50.

What will become the dominating PV technology in the next 5 years?
Five years from now, glass, aluminum, copper and labor will be the major cost components of PV systems — not crystalline cells or thin film or some new magic nano-dust that the scientists cook up. Our industry has to look at all of the non-cell opportunities to figure out how to reduce costs more.

How can solar PV compete with thermal solar energy plants in utility-scale PV projects in potential markets such as the USA, India, Spain, China, and elsewhere?
Easy: do an accurate life cycle calculation of ongoing operations and maintenance costs. Then PV static ground mount PV installations are much cheaper than anything with moving parts and fluids.

Isn’t the solar industry likely to follow the wind-energy industry soon with more than 90% of the market shared by only 10 major manufacturers?
Why ten? I think there will be only five major manufacturers. In most commoditized markets there are one or two market leaders who make money, a few followers who are slightly better than breakeven, and a bunch of new entrants trying to leverage their technology to get into the top five. The only reason we have so many manufacturers now is that there has been no price competition over the past five years.

What do you expect to learn at The Solar Future conference?
I’m curious to learn about new business models for the solar industry. The computer industry went through a major transition from the 1970s (mainframes, minicomputers) to the 1980s (personal computers) when costs came down quickly. I expect that the solar industry will move towards more specialization (as in semiconductors) and more contract manufacturing (as in personal computers and cell phones). I’m very curious to find out who will be the leaders as our industry makes this inevitable transition. I’m also curious to find a beer as good as Sierra Nevada Pale Ale.

How will the solar industry look in 5 years from now? And your company?
We will all be very busy installing solar on rooftops with no incentives needed. The industry will have standardized on AC solar panels with integrated wiring, racking and grounding. And Akeena Solar will be happily providing these panels to installers around the world.

Thank you for the interview!

Barry Cinamon will be one of the speakers at the More information and registration for The Solar Future Conferenc: http://events.solarplaza.com/thesolarfuture/

The solar energy market will shrink in 2009 but start a new period of growth next year

The global photovoltaic solar energy market is predicted to shrink in 2009. But the market is expected to start a new era of growth next year. This is the conclusion reached by SolarPlaza after analysis of data from the world’s major PV markets. The Spanish market boomed in 2008 as a result of a generous feed-in tariff which led to a global market growth explosion of more than 100% compared to 2007. It stimulated many manufacturers to increase or start production of solar modules. The conclusion reached at the first Global Demand Conference back in 2007, was that the industry was already heading towards an oversupply situation. That was before the market boom in Spain, which made the industry even more enthusiastic. Production capacity was increased almost blindly as a result, with many believing there would be endless growth. But the solar energy market is still fully dependent on government support programs, and thus related to politics and elections. The new government in Spain halted the costly stimulation of solar PV. The result was a 40% decrease, or more than 2500 MegaWatts, of global market volume in 2009. While many other markets have reported continuous strong growth, none will be able to compensate this amount. Solar module prices are now being pushed downwards for three reasons: an oversupply of industry production, a smaller market in Spain and, on top of this, the global economic and financial crisis. The numerous new thin-film manufacturers that entered the market this year will have a hard time selling their freshly certified products. In the major markets such as Germany and Italy, buyers and investors, and in particular the financing banks, prefer well established product brands. The companies that are expected to remain in business are those with a proven track record and the ability to meet guarantees. Several of the new players see offering a low price as the best strategy to survive, and gain some market share. This will put even greater pressure on module prices. This phase in the market’s development will cause a few casualties among the numerous manufacturers, and lead to industry consolidation; but a stronger solar industry will emerge.

And there is light at the end of the tunnel. Module and system prices have decreased by more than 10% over the last few months - sufficient to compensate the reduced German feed-in tariff this year. Investment in solar energy in Germany became more attractive in 2009 compared to 2008. The German market is therefore likely to grow, and there is no doubt that it will become the world’s largest market again in 2009.The market volume could reach 1900 to 2000 MegaWatts of newly installed power this year. And if module prices continue to decrease, the volume could be even higher as solar is one of the few safe investment alternatives sure to deliver a decent return on investment. The global solar industry will therefore remain highly dependent on development of the German market, where parliament elections take place later this year. The solar industry should be thankful to German tax-payers for keeping the industry alive right now. Continued government support will be required only for a limited number of years, however. The industry needs market volume to bring down costs, and for prices to reach ‘grid parity’ in several markets. At that moment, when the cost of solar energy equals the cost of electricity from the grid, government incentives will no longer be needed, and an endless road of growth opportunities will lie ahead.

Several governments recognize the importance of market stimulation, and have announced incentive programs. The most important ones are in the USA, Greece and China. There are also good signals coming from India. With a permanent power shortage, and the world’s highest irradiation levels, India’s potential for solar energy, as in these other countries, is unprecedented. If module prices decrease further this year, and all indications are that they will, these markets will start to see a difference in sales volumes from 2010 and beyond. These few more years of necessary government support will be less than it would take to develop and build a nuclear power plant. Strong market drivers will then support further growth in a world longing for more, but climate-friendly, energy solutions. Solar PV can provide this solution, delivering independence and security in energy supply from an inexhaustible energy source. In a few years, conditions will have improved, with an expected recovery of economies, and a consolidated PV industry with strong survivors working on further technology improvements. If oil and gas prices increase once more, and the introduction of electric cars spurs the need for solar power even further, we will be close to the start of a solar revolution. At that point, tax payers and governments will start to be repaid with endless new business opportunities, jobs, and sustainable energy. All this could happen this decade. The solar future is closer than most people think.

SolarPlaza is organizing a top-level conference - “The Solar Future” - on 26 May 2009 at the Kempinski Four Seasons in Munich. CEOs and experts from the world’s leading PV companies (such as Q-Cells, Suntech Power and Akeena Solar) and leading experts from industry and finance will be discussing the topics above.
SolarPlaza, based in Rotterdam, the Netherlands (www.Solarplaza.com) is the independent global platform for knowledge, trade and events for the photovoltaic solar energy (PV) industry.

The Thin-film Challenger:
The feasible objective for next year: module selling price at $1/Wp
QS Solar is a new amorphous silicon manufacturer. The company will challenge the industry and market with a record low module price.
Lynn Sha; General Manager, QS Solar