Photovoltaics: 9 Trends to Watch in 2010

Tough grading for a rough 2009 and my 2010 trends and predictions.

20092010 Although I hold the Blog accountable year round, my tradition is to look back at early year predictions and observations. As I am liberal with criticism, I won’t be grading last year’s Photovoltaics: 7 Trends to Watch in 2009 post on a curve.

Photovoltaic Market Demand Growth
In 2009, I said: “I find it too easy to join the pessimism about Photovoltaic (PV) Industry growth in 2009. Going contrarian, my rosy nominal forecast for 2009 is 45% growth in PV module demand on a GigaWatt-peak (GWp) basis while 20% to 30% lower PV module pricing limits revenue growth to only 20% or 10% respectively.
Grade: Fail

As my caveats were not met, I could have gone with unsatisfactory or incomplete:

This forecast is contingent upon normalization of credit markets by Spring 2009 with adequate financing available for large photovoltaic projects at attractive interest rates.

But 2009 PV module prices plunged deeper than my back of the napkin calculations projected.

Although the final 2009 numbers are not in yet, “Solarbuzz Forecasts 6.37 GW Global Solar Photovoltaic Market in 2009” representing 5% growth over 2008 looks reasonable until then. Meanwhile, “Solar Power: Sunshine’s Cloudy Days” by Mark Halper for TIME made the unenlightened decision to quote iSuppli data for 2009 PV installations.

For 2010, I predict a return to historical 45% plus PV installation demand growth given a reasonable and speedy German Feed-in Tariff (FiT) revision. I believe the new German center-right government will cut the Renewable Energy Law (EEG) FiT so investor rate of returns are back in the high single digit range. The spectre of a double dip recession still looms after stimulus spending wanes, but I am optimistic a long, slow recovery is underway.

[Ed. Note: The German FiT situation is fluid in real time. Please see “German feed-in tariff cut will be 16-17% - confirmed” by Emma Hughes at PV-tech.org for example.]

I also forecast Japan will install more PV than the United States in 2010 due to their improved and simpler support schemes.

Polysilicon and solar grade silicon outlook
I didn’t make much of a prediction when I said: “It now looks as though polysilicon supply will be in balance to oversupply in 2009.
Grade: Pass

I did ask the right questions:

What will happen if polysilicon spot prices dip below long term contract pricing? Will this trigger automatic price adjustments or demands for contract renegotiations?

Two high profile solar wafer contract disputes did emerge between Conergy and MEMC as well as Q-Cells and LDK Solar.

Per Solar Polysilicon Oversupply until 2013?, solar silicon supply is more than adequate to cover 45% PV demand growth ignoring thin films and perhaps enough to cover “PHOTON Consulting projects global PV installations will more than double in 2010, expects price crash by 2013” although a new PHOTON Consulting report was just released called Solar Power Markets: Prepare for Impact.

In 2010, are polysilicon prices under pressure due to multiyear overcapacity and uncertain though declining FiTs? In “Poly-Si suppliers offer one-year contract quotes at US$55/kg, say Taiwan makers” at DIGITIMES (subscription may be required), Nuying Huang and Adam Hwang reported long term polysilicon supply contracts were in the $60-70 per kg (kilogram) range amid speculation regarding potential $45-50 per kg short term contracts.

Thin Film Photovoltaics
From my trio of 2009 thin film PV predictions, two were achieved by OptiSolar when they both came out of the closet and failed. A clear »Second Solar« did not emerge in 2009 although Solyndra joined the leading contenders.
Grade: Pass

First Solar will remain the thin film PV king of the hill in 2010 and may well defend its title as the number one (1) PV module manufacturer. Reviewing PHOTON Consulting’s Solar Annual 2009: Total Eclipse, I realized it would take years before any Second Solar could challenge First Solar’s thin film PV leadership.

CSP (Concentrating Solar Power)
I didn’t make a CSP prediction last year. I’ll just recognize eSolar’s 5-megawatt (MW) Sierra SunTower solar power plant as the Concentrating Solar Power project of year as Power Engineering already has with “eSolar’s Sierra SunTower Named Renewable Project of the Year”.

By developing the project on disturbed private lands, eSolar distinguished themselves and navigated the labyrinth of California permitting and environmental regulations to complete the project. By contrast, eSolar’s CSP competitors are obsessed with building projects on US government lands or desert preserves. I am still concerned about CSP water requirements in arid desert locations as “Amid state’s push for solar power, water-supply worries arise” by Shaun McKinnon for The Arizona Republic discusses across the California state line.

HCPV (High Concentration PhotoVoltaics)
My rosy forecast extended to HCPV when I said: “I predict a 30 MWp plus HCPV project deal in 2009.
Grade: Fail

Last I heard, SolFocus was still struggling with environmental permitting issues for the Samaras Group Concentrator Photovoltaic (CPV) Project in Greece mentioned in SPI 09: Concentrating PhotoVoltaics Highlights.

Though I couldn’t confirm the system capacity details (1 MW versus 1 MegaWatt-hour) or the module manufacturer, I believe the largest HCPV project completed in 2009 was a 1 MW solar power plant in Taiwan. The HCPV project was a pilot program sponsored by the Institute of Nuclear Energy Research (INER). Please see “New solar power plant inaugurated” by Vincent Y. Chao for The Taipei Times.

I predict at least 30 to 50 MWp (MegaWatt-peak) of HCPV must be installed in 2010, or HCPV is destined to remain Eric Wesoff’s pet zero billion-dollar market.

Economic Outlook (was Recession Risk)
On the Great Recession, I said: “My thesis is Photovoltaics and renewable energy will be leading indicators of a 2010 global economic recovery. In my opinion, the economic situation is still deteriorating and has not bottomed. Sorry, there won’t be a recovery from the recession in the second half of 2009.
Grade: Fail

I wasn’t that wrong, but most countries were out of recession on a technical basis (please see “Has the world economy turned the corner?” by Christine Oliver for the Guardian) by the third quarter of 2009 even if the recoveries are slow and jobless.

Oil
So I said: “I predict oil will test $25 per barrel in 2009; oil will recover to over $100 per barrel but not until the end of 2010 or the 2011 timeframe when the economic recovery picks up.
Grade: Pass

Oil didn’t quite trade as low as $25 per barrel but it did remain below $100 per barrel in 2009. Oil had a speedy rebound after touching below $40 per barrel and stayed above $70 per barrel since the technical end of the recession. Despite the stubborn trade, I’ll predict oil will stay below $100 per barrel though 2010 anticipating the dollar to strengthen throughout the year.

PV Industry Shakeout
Both start-ups and established manufacturers surviving 2009 will face a tougher 2010 driven by PV industry oversupply and FiT reductions. Thin film and CPV firms are most vulnerable to the shakeout. Crystalline silicon solar manufacturers will also fail and undifferentiated PV module firms occupy a precarious link in the PV value chain.

I predict the PV “take under” trend will continue as faltering or failing firms are acquired for valuations well below their venture capital or equity funding since inception. Other acquirers will bottom fish in liquidation to acquire talent, know how, patents, and equipment at closeout prices.

Any firm not benefiting from stimulus funds, government loans, or manufacturing tax credits should be on the watch list if venture capital is no longer funding them.

I predict a SunFab customer will fail in 2010.

PV IPOs (Initial Public Offerings)
Instead of speculating about the usual PV manufacturing suspects, I’ll go downstream and predict SunRun, Inc. or SolarCity or both will IPO in 2010.

My 2010 “Out There” Prediction
The EMCORE Corporation (NASDAQ:EMKR) Board of Directors and Executive Management will be ousted when an activist shareholder gains majority control to effect regime change.

(Full disclosure: I own some shares of FSLR stock.)

6 comments

  1. disdaniel says:

    Ed,

    Do you know what the current (i.e. since 1/1/10) German solar FIT rate is? (top rate)

    I assume it is ~10% less than 2009, with a further reduction of ~15% to come later this year. I’m trying to understand the likely eurocent/kwh #.

  2. admin says:

    The January 1, 2010, EEG rates are on the Bundesnetzagentur (Federal Network Agency) website in German.

    Please see 17479.pdf

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