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According
to a new 137-page report from Lux Research entitled ‘Solar State of the
Market Q1 2008: The End of the Beginning,’ the photovoltaic market is
expected to grow 27 percent per annum through 2012 to reach $70.9
billion, up from $21.2 billion in 2007.
The market research firm is also dismissive of concerns over an imminent over-supply of polysilicon feedstock that could spark overcapacity concerns at solar cell and module makers and affect margins.
“By 2010, crystalline silicon PV will be freed from polysilicon supply constraints – but it will immediately be hit with a one-two punch of slackening demand growth and increased competition from new technologies, namely inorganic thin-film PV and solar thermal,” said Michael LoCascio, Senior Analyst at Lux Research. “While sales volumes, measured in megawatts, will continue to increase, average sales prices will fall. The result is that revenues for crystalline silicon PV will drop on a year-over-year basis in 2010 for the first time in memory.”
Lux Research claims to have closely studied 133 polysilicon construction projects in 2007, concluding that supply constraints will last into 2010 rather than easing in 2008.
However, Lux Research believes that the PV industry is heading for a period of over-capacity sometime in 2009. Solar module demand is expected to reach 8.96GW in 2009 but the supply side will be able to handle 9.57GW.
The margin of oversupply is expected to peak in 2012. Demand will reach 20.3GW against a market supply of 21.2GW, according to Lux Research.
“Government subsidies in countries like Japan, Germany, and Spain have helped make large-scale solar a reality, with annual installations reaching 3.43 GW in 2007," said Lux Research Senior Analyst Ted Sullivan, the report’s lead author. “During this period, solar demand has consistently outpaced supply. But the market is now approaching a tipping point: We project that the supply of solar modules will exceed demand in 2009, leading to falling prices and a shake-out among companies that aren’t prepared to thrive in this new environment – particularly crystalline silicon players that haven’t invested in new thin-film technologies.”
Not surprisingly, the market research firm expects subsidies in Germany, Japan and Spain to decline with China and India in particular pushing ahead, resulting in a greater level of domestic PV production.
