Plus 2008 prediction scoring and 2009 predictions

As promised in Top 10 GUNTHER Portfolio Posts of 2008, it’s time to cover 2009 trends and predictions while scoring my 2008 predictions from Photovoltaics: 2007 Post Review and 2008 Trends to Watch – Part 2.

Photovoltaic Market Demand Growth (new for 2009)

Although Solar Market Eclipse Coming in 2009, iSuppli Warns:

Bringing an end to eight consecutive years of growth, global revenue for Photovoltaic (PV), panels is expected to plunge by nearly 20 percent in 2009, as a massive oversupply causes prices to drop, according to iSuppli Corp.

The plunge in revenue will come despite an 9.6 percent rise in Gigawatt (GW) installations of solar panels in 2009, growing to 4.2GW for the year, up from 3.8GW in 2008.

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.

This forecast is contingent upon normalization of credit markets by Spring 2009 with adequate financing available for large photovoltaic projects at attractive interest rates. Renewed PV market growth in Japan and the United States along with strong new PV market growth in Italy and Greece are required to achieve this forecast. Perhaps the Chinese government will fund large PV projects to stimulate production by domestic PV manufacturers?

Polysilicon and solar grade silicon outlook

Last year, my heading was Polysilicon and solar grade silicon shortages persist, and I said: This silicon shortage seems set to continue until at least 2010 regardless of the self serving predictions of certain Solar CEOs.
Grade: Fail

Towards the end of 2008, “Poly-Si spot prices fall to US$150-175/kg, say Taiwan makers” by Nuying Huang and Adam Hwang for DIGITIMES. It now looks as though polysilicon supply will be in balance to oversupply in 2009. The polysilicon supply situation is tempered by the financial crisis which will cause silicon start-ups to fail, slow planned capital expansions, or delay production reinforcing REC Silicon’s view that one-quarter (25%) or less of all announced, planned, and rumored polysilicon capacity expansions by new entrants (Tier 2 and Tier 3) will succeed by 2012 (please see REC Group Capital Markets Day 2008). However, if global semiconductor demand declines by 25% in 2009 per “Top 20 predictions for semis in 2009” by Mark LaPedus at EETimes.com, will excess polysilicon be redirected to solar? What will happen if polysilicon spot prices dip below long term contract pricing? Will this trigger automatic price adjustments or demands for contract renegotiations?

Thin Film Photovoltaics

At the start of 2008, First Solar is the king of the hill in thin films and photovoltaics with the lowest variable production cost per Watt in the industry.

I did not have a proper thin film prediction last year, but First Solar still rules the PV roost even if the “Report: First Solar Reaches Grid Parity” was a bit premature.

I have a trio of predictions for thin film photovoltaics in 2009:

• A thin film PV company will emerge as PHOTON’s »Second Solar«.
• A major (over $100 million of capital investment) thin film start-up will fail.
• OptiSolar, Inc. will come out of the closet.
  

CSP (Concentrating Solar Power)

CSP is positioned to remain the hottest segment in solar power. I expect the drawbacks of CSP to become better known in 2008 though these may be offset by progress in energy storage (see the Ausra, Inc. portion of my Energy Storage post).
Grade: Pass

CSP made progress with “Ausra’s Kimberlina Solar Thermal Plant” by Ed Ring at EcoWorld but the credit crunch has slowed the development of planned multi-hundred MegaWatt solar thermal power plants offset by the new ITC rule allowing utilities to take advantage of the tax credits (please see Solar Investment Tax Credits ride the $700 Billion Bailout Wake).

The approval of the Sunrise Powerlink Transmission Project (please see “California OKs Controversial Transmission Project” by Ucilia Wang at Greentech Media) was a boost for similar grid infrastructure needed by California CSP projects to deliver power from desert facilities to coastal California cities.

HCPV (High Concentration PhotoVoltaics)

In 2008, I am expecting the next major High Concentration PhotoVoltaics project to be announced and located in the southwestern United States, Spain, or Greece. Construction may even begin in 2008.
Grade: Pass

As I have mentioned in passing before, “SolFocus and EMPE Solar Sign $103 Million Deal for 10+MW UtilityScale Project” was the megadeal HCPV project announcement of 2008 located in southern Spain. “SolFocus and Samaras Group to Develop First Commercial Solar Project in Greece Using Concentrating Photovoltaic (CPV) Technology” was a follow-on 1.6 MWp (MegaWatt-peak) deal. I predict a 30 MWp plus HCPV project deal in 2009.

Recession Risk

My fear is the US housing bubble and its liquidity crunch aftermath will result in a slowdown or recession in 2008 later impacting the world economy.
Grade: Pass

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.

Solar Stocks, Oil, and Gold

Solar stocks traded on the NYSE and NASDAQ exchanges in the United States are overdue for a significant correction. I think oil may revisit $50 per barrel if the recession goes global by the second half of 2008 barring an unforeseen calamity and even if Peak Oil is here. Gold is your best bet if stagflation takes hold or the US dollar continues to decline in value or both.
Grade: Pass

Solar stocks did suffer a significant correction in 2008. For example, the stock price of thin film high flyer First Solar, Inc. (NASDAQ:FSLR) declined over 48% in calendar year 2008. Oil dropped below $50 per barrel by the end of 2008, but I had no idea it would round trip from a record high of $147.27 a barrel driven by rampant speculation! Gold outperformed credit crunch plagued stock markets by increasing almost 3% in 2008 after peaking at $1,030.80 per troy ounce.

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. Enjoy the low gasoline prices while they last. Cash strapped US state governments, California and New Jersey for example, may enact gas tax hikes to reduce huge budget deficits.

I intend to look at energy policy in a future post.