TODAY’S STUDY: A YEAR IN SUN

2010 Solar Technologies Market Report
Kristen Ardani, Robert Margolis, et.al., November 2011 (U.S. Department of Energy/Energy, Efficiency & Renewable Energy)

Executive Summary

This report focuses on solar market trends through December 31, 2010; it provides an overview of the U.S. solar electricity market, including photovoltaic (PV) and concentrating solar power (CSP) technologies, identifies successes and trends within the market from both global and U.S. perspectives, and offers a general overview of the state of the solar energy market. The report is organized into five chapters. Chapter 1 provides a summary of global and U.S. installation trends. Chapter 2 presents production and shipment data, material and supply chain issues, and solar industry employment trends. Chapter 3 presents cost, price, and performance trends. Chapter 4 discusses policy and market drivers such as recently passed federal legislation, state and local policies, and developments in project financing. Chapter 5 closes the report with a discussion on private investment trends and near-term market forecasts.

Highlights of this report include:

• Global installed PV capacity increased by 16.6 gigawatts (GW) in 2010, a 131% increase from the year before and nearly seven times the amount (2.4 GW) that was installed in 2007. The 2010 addition brought global cumulative installed PV capacity to nearly 40 GW. Leaders in 2010 capacity additions were Germany, with 7.4 GW, and Italy, with 2.3 GW installed, followed by the Czech Republic and Japan with approximately 1.5 GW and 990 megawatts (MW) installed, respectively. Germany maintained its lead in cumulative installed capacity in 2010 with 17 GW, followed by Spain at 3.8 GW, Japan at 3.6 GW, and Italy at 3.5 GW.

• The United States installed approximately 918 MW of PV capacity in 2010, a 84% increase over the 477 MW installed in 2009. The 2010 addition brought U.S. cumulative installed PV capacity to 2.5 GW. California continued to dominate the U.S. market with nearly 252 MW installed in 2010, bringing cumulative installations in that state to 1.02 GW, or 47% of the U.S. market. New Jersey followed with 132 MW installed in 2010, bringing cumulative capacity to 259 MW, or 12% of the U.S. market.

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• Globally, there was approximately 1,318 MW of cumulative installed CSP capacity by the end of 20101 with nearly 20 GW2 in the pipeline (GTM Research 2011). In 2010, there were 3 CSP plants installed in the United States, totaling 78 MW, and 9 CSP facilities installed in Spain, totaling 450 MW. Outside of the United States, 814 MW of CSP was under construction by the end of 2010, with 10 GW in the U.S. pipeline.

• Global PV cell production continues to demonstrate impressive growth, with global cell production capacity increasing at a 3-year compound annual growth rate (CAGR) of 66%. A majority (59%) of all PV cells were produced in China and Taiwan in 2010, which also retains 62% of global cell production capacity. Europe maintained its position as the second largest cell producer, with 13% of global production. Japan held a 9% share of the market, while North America was in fourth with 5% of PV cells produced globally in 2010.

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• Thin-film PV technologies have grown faster than crystalline silicon (c-Si) over the past 5 years, with a 5-year CAGR of 94% for thin-film shipments and a 5-year CAGR of 63% for c-Si, from 2005 to 2010. Globally, thin-film technology shipments grew by 72% in 2010 compared to 2009, despite the fact that thin films overall market share decreased from 17% in 2009 to 13% in 2010.

• Global average PV module prices continued to drop in 2010 due to increased supply competition. As manufacturers lowered prices to compete in the global market, average module prices reached all-time lows despite robust demand and tight raw materials supplies during the second half of the year. In 2010, the average module price for a mid range buyer dropped 16%, to $2.36/WP ([peak]w) from $2.82/WP in 2009.

• Global venture capital (VC) and private equity (PE) investment in solar totaled $2.3 billion in 2010, representing a 58% CAGR from 2004 to 2010. Some of the notable transactions completed during 2010 included BrightSource Energy’s $150 million series D VC transaction, Abound Solar’s $110 million series D VC transaction, and Amonix’s $64 million series B VC transaction.

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• Federal legislation, including the Emergency Economic Stabilization Act of 2008 (EESA, October 2008) and the American Recovery and Reinvestment Act of 2009 (ARRA, February 2009), is providing unprecedented levels of support for the U.S. solar industry. The EESA and ARRA provide extensions and enhancements to the federal investment tax credits (ITCs), including allowing utilities to claim the ITC, the removal of the residential cap on the ITC, a new 30% manufacturing ITC for solar and other clean energy technologies, and an option that allows grants in lieu of tax credits for taxpaying corporate entities. The $787 billion ARRA package includes funds for the U.S. Department of Energy’s (DOE) Loan Guarantee Program, DOE Office of Energy Efficiency and Renewable Energy (EERE) programs, and other initiatives. In addition to federal support, state and local policies, incentives, rules and regulations, as well as financing developments, these programs continue to encourage deployment of solar energy technologies…

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Solar Market Forecasts, PV and CSP

The ongoing expansion of the solar market continued to attract the attention of numerous financial institutions and research and consulting firms seeking to provide analysis and forecasts for the PV and CSP sectors. This section analyzes these projections, both to identify the expected path of the industry and to recognize the substantial variance in market forecasts. Key trends and uncertainties for the solar market in the next several years are also discussed.

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PV Market Forecasts

This section focuses on PV market projections made in late 2010 to early 2011.65 The global economic crisis that became apparent in late 2008 reduced overall demand for PV and continues to hinder the availability of funds for capital investment. Because of these financial changes, some analysts revised their forecasts in early 2009 from forecasts released in mid-to-late 2008. Some of those changes have carried over as financial markets continue to remain uncertain.

Figure 5.6 illustrates the forecasted size and composition of PV production through 2013, while Figure 5.7 depicts global thin-film PV module supply forecasts. For total production, the median estimate increases from 6.0 GW in 2008 to 26.2 GW in 2013, a 5-year CAGR of 34.1%. Growth is expected to be relatively consistent through 2013 for both the c-Si and the thin-film segments, with the median estimate indicating thin films will likely maintain 88% and 82% of the PV module market. In addition to the growth of the median estimate, the range of estimates is significant. In 2013, the high estimates for c-Si and thin films are roughly twice that of the low estimates. Uncertainty in these projections is likely due to differing opinions about demand for PV, the ability to expand production sufficiently for each part of the PV supply chain, and technological and cost improvements of c-Si and thin films.

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Regarding thin-film versus c-Si production, the median projection indicates thin-film production is expected to grow at the same rate overall during the next several years, with a median forecasted 2008 to 2013 CAGR for thin-film PV and c-Si of 34%. However, c-Si is still expected to be the dominant technology for the next several years, accounting for 87% of total projected PV production in 2013. There is a reasonable level of disagreement among analysts about the future PV market share of c-Si versus thin film, demonstrated by a range of 74% to 91% for 2013 c-Si market share. To better describe the thin-film sector, Figure 5 presents the projected rise in thin-film PV module production by technology through 2010. The divergent range of supply estimates is reasonable given that thin-film PV continues to face technology and scale-up risks, in addition to overall market uncertainty for PV in general. Despite these uncertainties, median estimates for thin-film technologies imply growth, with 2008 to 2013 CAGRs of 43% for CdTe, 35% for a-Si, and 81% for CIGS production.

The a-Si market includes established producers such as Energy Conversion Devices, Sharp, Signet Solar, and Kaneka, as well as numerous new entrants. New producers had previously indicated plans to enter the market through the purchase of turnkey systems from Applied Materials or Oerlikon. However, given the capital expenditures necessary for the purchase of turnkey production lines, expansion of a-Si production from new entrants continues to be curtailed by the tight credit market. In addition, as PV module prices have fallen faster than system prices, non-module costs have increased as a proportion of total system costs. Because non-module costs-per-watt rise as module efficiency declines, a-Si (which has the lowest efficiency of any of the principal PV technologies) has become less attractive.

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CIGS module production started from a very low base, a median 2008 estimate of just 59 MW, but is expected to grow substantially in the near term. The median projection for 2013 is 1.1 GW, with a low estimate of about 570 MW and a high estimate of about 1.7 GW. The enormous range in estimates reflects substantial scale-up and technology risks encountered by companies such as MiaSole, Nanosolar, and Solyndra as they expand commercial production.

Figure 5.8 shows the demand projections for solar PV modules by location. Median global demand is expected to grow from 6 GW in 2008 to 22.3 GW in 2013, a 5-year CAGR of 30%. Europe is expected to remain the largest region for solar energy through 2012, at which time the United States is presently expected to become the largest PV market in the world. The U.S. market is expected to grow at a 68% CAGR between 2008 and 2013, while Germany will grow at 1% over the same period due to the expected peak and then decline of German PV demand. As with the production projections, there is tremendous range in the demand estimates resulting from uncertainties about policy incentives, electricity prices, cost reductions of PV systems, and the price elasticity of PV demand.

Figure 5.9 shows forecasted global module and system prices through 2013. Module prices are expected to decrease from $3.93/WDC, to $1.09/WDC in 2013, a 5-year CAGR of −23%.

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CSP Market Forecasts

CSP differs markedly from PV with respect to history, installation size, permitting and construction duration, and technological readiness. Whereas PV has had a history of consistent annual installations, 350 MW of CSP were built in the 1980s with no subsequent installations in the United States until 2005. Installation sizes on the order of tens of megawatts and up to 4-year permitting and construction durations contribute to the difference in deployment patterns between CSP and PV. Only one CSP technology (parabolic troughs) has been demonstrated long term on a fully commercial scale, although there are a growing number of planned CSP systems that are dish engine, power tower, and linear Fresnel technologies. In 2009, three new plants totaling 12 MW of new generation capacity were added, including the first power tower in the United States (the Sierra SunTower), the first CSP facility in Hawaii (a trough system named Holaniku), and a linear Fresnel system in California (Kimberlina) (SEIA 2010). Spain also saw remarkable growth in 2009, with the installation of seven CSP facilities totaling 320 MW.

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In 2010, three CSP plants came online in the United States, totaling 78 MW (GTM Research 2011), and nine CSP plants came online in Spain, totaling 450 MW (Protermo Solar 2010). Outside of the United States, 814 MW of CSP was under construction by the end of 2010, as broken down earlier in the report in Table 1.2 (NREL 2010). The number of plants under construction is dwarfed by the estimated number of planned plants. In the United States alone there was 10.8 GW of proposed CSP capacity by the end of the year (GTM Research 2011).

While different sources report planned projects differently, Tables 5.1 and 5.2 attempt to represent the amount and location of global-planned CSP installations through 2015 (GTM Research 2011). Table 5.1 lists CSP projects as planned and under construction, by country, while table 5.2 depicts the respective market share of each country. Of the estimated 19 GW in the global CSP pipeline, 57% are in the United States, 21% are in Spain, 13% are in China, about 6% are in the MENA region, and the remaining 3% are dispersed across India, Greece, South Africa, Italy, and France. It should be noted that the projects in the global pipeline are by no means guaranteed. Several major factors could prevent many of these projects from being completed, resulting in a pipeline that will likely be reshaped on a continual basis.