According to a new report from Lux Research, a top advisory firm that provides ongoing intelligence for emerging technologies, despite an oversupply situation expected to occur in early 2009, the global solar market will reach $100.4 billion in 2013, up from $33.4 billion in 2008.
The report entitled “Solar State of the Market Q3 2008: The Rocky Road to $100 Billion,” indicates that solar markets are poised for continued impressive growth, with new installations primed to increase nearly five-fold from 2008 to 2013.
However, starting in 2009 supply will exceed demand, leading to price decreases. This change will transform the solar industry and consequently create a market where sales grow dramatically, but it is increasingly difficult for companies to profit.
Ted Sullivan, Senior Analyst at Lux Research said:
As solar subsidies diminish over the next year, the current bonanza in which all players are winners will come to an end.
The report continues by pointing out that a price-erosion will most likely trigger an industry shake-out, putting tremendous pressure on the smaller players – forcing them to fail or get acquired. The remaining solar manufacturers will have to eventually face margin pressures for years to come due to a booming supply build-out.
Lux Research analysts in their report also emphasized the fact that companies active in lower-cost thin-film technologies will be better positioned to weather the price reductions, but those without differentiated technology will still be at risk.
The report concludes that driven by aggressive capacity expansion and the increasing availability of polysilicon, the solar market will grow 48% annually through 2013, reaching 23 gigawatts (GW) from 4.9 GW in 2008. In addition, cuts to government subsidies and aggressive ramp schedules will push the market into oversupply in 2009, when 7.9 GW of modules will be installed.
In the Eurozone, Lux predicts the Spanish market will be limited by subsidy caps and the markets in France, Italy and Greece, will be slower to develop than expected. In Germany, which is the largest solar market today, years of strong investment in renewable energy such as solar and wind will push the market closer to the limits of grid infrastructure, which can only handle roughly 20% of intermittent renewable sources. As Germany approaches this cap in the next five years, growth will be limited to an average of 16% annually through 2013, according to the report.