According to the report, oversupply will start new and dynamic phase in rapidly growing solar industry.
The worldwide market for solar (PV) energy and the PV industry itself have grown substantially in 2007 and early 2008. However, growth in the production of solar panels appears to have outpaced growth in the demand side of the market. This could lead to an oversupply situation. Growth in the worldwide demand for solar panels is still entirely dependent on, and limited by, local subsidy programmes. In various countries new subsidy programmes are commencing, but in the largest markets contributions are being cut back. 2008 could therefore be a turning point and a crucial year for the development of the international PV market and industry.
The current developments look like the famous 'hog cycle' scenario: the rapidly growing (world) market has attracted many new producers. This could create an oversupply situation, leading to falling prices and margins. This would lead to consolidation in the market and further expansion. Therefore, a surplus supply of solar panels in the next few years to 2010 could lead to considerable price reductions and a consolidation in the PV industry.
This makes the next few years a crucial period, but also a prelude to a new era after 2010, in which grid parity will be reached in a growing number of market segments. This means that the cost per kWh of solar power for private individuals, for example, will be competitive with kWh from the grid. From that moment on, the PV industry will be heading towards rapidly growing demand once again, which will no longer be dependent on and limited by subsidy programmes. This could lead to unprecedented growth opportunities for the PV industry and perhaps even an undersupply situation.
Conclusions
The demand side of the global PV market will continue to grow from 2008 to 2010. SolarPlaza anticipates a year-on-year growth of 30-45%. For the next three years, growth on the demand side of the world market will be determined and limited by the available subsidies and other government schemes.
In this period until 2010, industrial production capacity and actual production will grow much faster than the demand side of the market, giving rise to a period of oversupply. This oversupply situation, possibly starting by the end of 2008 or else in 2009, could lead to an accelerated reduction in PV module prices and a consolidation in the PV industry.
From 2010 onwards, grid parity will come quickly into reach in various markets, which will lead to a new increase in growth on the demand side. Global demand will then no longer be fully dependent on government financial support.
The next three to four years can therefore be considered an interim period – a bumpy ride with ups and downs, winners and losers. Fasten your seatbelts to get through this phase safely. But after that there is the prospect of phenomenal market potential and continuous, rapid market growth. Fasten your seatbelts again, but this time to safely steer your way along the road of robust growth!
On 2 September Solarplaza will be holding the Second Global PV Demand Conference in Valencia. This conference will focus on developments in the demand side of the worldwide PV market. International experts from the most important and largest markets will be sharing their analysis and vision of the anticipated growth of the supply and demand side and likely consequences of an oversupply.
For more information visit:
www.solarplaza.com and www.globaldemandconference.com.
To read the report visit:
http://www.solarplaza.com/event/globaldemandconference/lib/downloads/globalpvdemandreport.pdf
