FORESEEING PV SUN

2009 Global PV Demand Analysis and Forecast: The Anatomy of a Shakeout II
Daniel Englander, March 2, 2009 (Greentech Media)
and
PV Technology, Production and Cost, 2009 Forecast: The Anatomy of a Shakeout
Shyam Mehta, January 27, 2009 (Greentech Media)

SUMMARY
The "Anatomy of a Shakeout" series, the latest in the fine reports on New Energy produced by Greentech Media and the Prometheus Institute, applies a supply-demand analysis to the solar energy photovoltaic (PV) industry to forecast where the sector is headed.

Intended for solar photovoltaic (PV) industry specialists, the series is less concerned with defining the term ("photo" refers to light and "voltaic" refers to electricity) and less concerned with explaining about the solar thermal industry ("thermal" refers to the sun's heat), which uses concentrating technologies to build solar power plants and solar hot water systems, than it is with hardcore metrics about the makers and buyers of what are popularly known as solar "panels" and solar "thin-film."

The supply-demand analysis begins with sophisticated calculations of the availability of polysilicon and ends with a sophisticated assessment of the coming demand for electricity.

The "shakeout" of the title refers to the ongoing solar energy industry consolidation created by the current economic downturn (tight credit leading to slowed demand, idled manufacturing capacity, cancelled expansions and escalating oversupply).

2009 is predicted to be the solar energy industry’s weakest growth year since 1994.

2009 is also predicted to see solar energy reach grid parity in some markets.

Ahead of schedule? (click to enlarge)

In the supply analysis (authors: Shyam Mehta of Greentech Media and Travis Bradford of the Prometheus Institute):
(1) Production and capacity forecasts for PV cells, modules and wafers, 2008–2012;
(2) Company, technology and region market share analysis;
(3) Quantitative analysis of manufacturing costs for PV modules and the evolution of costs;
(4) First ever global PV module supply curves, 2008–2012;
(5) Detailed profiles for 118 crystalline silicon and thin-film companies.

The demand analysis sees producers having control of module price in a credit-constrained economy that blocks new players from the field and keeps consumers from amassing the buying power through which they might otherwise affect price.

In such a market, rate of return on module sales is the key competitive factor.

Module suppliers who understand and can serve the constraints facing project developers will survive the economic downturn and industry consolidation.

The main constraint on developers is failing capital due to the credit crunch and receding incentives.

The result will be fewer projects, due to a record low 13% industry growth, and falling module price, reducing industry revnues 15%.

Technical data from the Greentech Media/Prometheus report. (click to enlarge)

In the demand analysis (authors: Daniel Englander of Greentech Media, Shyam Mehta of Greentech Media and Travis Bradford of the Prometheus Institute):
(1) Quantitative analysis of project economics in Germany, Spain, the United States and Japan for c-Si and thin film-based residential, commercial and utility scale systems;
(2) First-ever country-level and global PV demand curves, 2009- 2012 and reconciliation of independently constructed global PV supply and demand curves, leading to an accurate forecast of module selling prices and equilibrium demand volumes;
(3) Quantitative analysis of manufacturer profit margins, market shares, grid parity, project economics, and module pricing;
(4) PV policy analysis;
(5) Electricity sector analysis;
(6) PV market development in the U.S., Germany, Spain, Italy, France, Greece, Portugal, The Netherlands, Czech Republic, Japan, South Korea, Australia, India, China and the United Arab Emirates.

Technical data from the Greentech Media/Prometheus report. (click to enlarge)

COMMENTARY
- From the supply analysis:
(1) Module supply increases. PV module manufacturing capacity will be 27.5 gigawatts by 2012, producing 23 gigawatts of PV modules. Thin-film modules will grow from 2007’s 13% of the market to 34% by 2012.
(2) Costs fall. Silicon module costs will be cut in half by 2015 to $1.40/Watt and CIGS thin-film modules will be $0.75/Watt.
(3) High-efficiency monocrystalline and low-cost thin film technologies triumph. They will be 30% (efficiency-adjusted) cheaper than traditional multicrystalline manufacturing.
(4) Asia dominates silicon manufacturing. 82% of world crystalline silicon cells will be made in Asia by 2012, driving their costs down and increasing their dominance over other manufacturers.

Technical data from the Greentech Media/Prometheus report. (click to enlarge)

- From the demand analysis:
(1) Demand drops. The global recession will impact lending, project finance, and government budgets. This will cause market problems in market-drivers Germany and Spain. Demand will grow only 13% to 5 gigawatts in 2009.
(2) Price drops as demand drops. Average module price will be below $2.50/ Watt in 2009 and below $2.00/Watt in 2010.
(3) Market size contracts. The 2009 market will be $12 billion, a 15% contraction. It will remain flat through 2012. Manufacturers retaining high rates of return will gain as others fall out of competition because of shrinking available capital.
(4) Asian multicrystalline and CIGS manufacturers dominate, CdTe and Super monocrystalline hold market shares. By 2012, thin-film modules will be 50% of new demand.
(5) Grid parity in some markets by the end of 2009. There will be a new emphasis on levelized cost of energy (LCOE) and $/kilowaat-hour as the crucial metric of competitiveness.
- The information in the reports may be essential for industry players and investors. At the prices charged, it had better be:
Single License - $2,495.00;
Premium Single License - $4,995.00;
Enterprise License - $4,495.00;
Premium Enterprise License - $8,995.00

Technical data from the Greentech Media/Prometheus report. (click to enlarge)

QUOTES
- From Greentech Media, on the supply analysis: “This data-driven analysis tackles manufacturing cost assessment company-by-company, technology-by-technology, region-by-region, to provide an exhaustive, bottom-up examination of the entire PV supply chain. The report culminates with the creation and forecasting of the industry's first-ever global supply curves, which shows the competitive position of every company and technology from 2008 through 2015.”
- From Greentech Media, on the demand analysis: “The report begins with a quantitative analysis of project economics in major PV markets, uses these results to build and forecast the industry's first-ever country-level and global demand curves, and culminates with the reconciliation of global demand curves with the global supply curves from PV Production, Technology and Cost, identifying market-clearing module prices and equilibrium demand volumes from 2009 through 2012.”