Phoenix, AZ -- Will the second half of 2010 look like the first half of 2009? That's the big fear in the solar industry, according to speakers at the 2010 Solar Summit sponsored by Greentech Media.
Solar is growing. Make no mistake. Globally, 9 gigawatts of solar may get deployed this year, according to GTM Research. That would be 50 percent growth over 2009. But declining prices for panels and factory capacity will squeeze margins. And changes to subsidy programs may create a situation where demand slows as the year goes on.
"That's what we are all holding our breath about," said Jim Pierobon, vice president of policy and marketing development at Standard Solar, during a meeting in the hallway.
As usual, the big factor determining the health of the industry is Germany. In the first half of 2009, only around 500 megawatts of solar were installed in Germany. In the second half of 2009, approximately 2.5 gigawatts of solar were installed in the country, according to GTM Research senior analyst Shayle Kann.
"That's a fivefold increase in the second half of the year," he said.
Germany, however, is set to readjust its feed-in tariff on July 1. The tariff for rooftop installations will likely decline by 16 percent and 11 percent for ground-mounted installations. The industry may not sink into the funk it found itself in in 2008 and 2009 as the German market slows, but it will likely, palpably slow.
"Germany will quickly lose its shine in the second half," said Kann. "There is a rush to get projects (in Germany) in the ground now."
What does this mean for module makers? By the middle of the year, modules might sell for $1.50 to $1.75 per watt in Germany. But if demand dips, the prices may have to dip toward $1.35 a watt in Germany. Not everyone will be able to sell at that price and make money, said Kann.
How bad the drop is depends on a variety of factors. Italy could soak up a lot of the modules now coming out of factories. Italy installed 544 megawatts of solar in 2009 and 47 percent of that total came in the last two months of the year, Kann said. The margins for independent power providers in the country is quite healthy, helped in part by high prices for conventional power in Italy. Up to a gigawatt could get installed in Italy this year.
"But it can't replace Germany," he said.
The U.S. market will likely grow by nearly 50 percent with 830 megawatts of solar planted on roofs and in the ground this year. Subsidies in five states -- Hawaii, Massachusetts, New Jersey, California and New Mexico -- have even created a situation where solar in commercial installations can actually cost less than grid power. A commercial solar installation in Hawaii could be constructed to produce power that is 17 percent less than power from the grid. Power from hypothetical commercial installations in New York and Nevada are only two percent of grid power, when all subsidies are factored in. Over time, the U.S. will be the largest market in the world.
"We're going to see this widespread grid parity on a subsidized basis" in the U.S., said Kann.
But again, the united nations of solar may not be enough to offset the anticipated torpor on the Rhine in the second half of 2010. Grid "parity" may also be a heading toward false summit, said Marc Romito, renewable energy program manager for Tucson Electric Power, unless issues like grid interconnection can be worked out.
Other interesting tidbits:
--U.S. solar manufacturing will continue to grow. In 2008, only 17 PV manufacturing facilities existed in the U.S., said GTM analyst Shyam Mehta. By 2012, there could be 51, judging by plans already announced.
--170 thin film manufacturers exist, but only a few will ever become full-fledged mass manufacturers, according to Mehta. Twenty new amorphous silicon manufacturers came into the market last year.
--By 2015, silicon solar panels should cost 80 cents per watt while thin-film solar panels should average around 55 cents a watt. The best amorphous silicon makers can produce modules for $1 now, said Mehta. The few copper indium gallium selenide (CIGS) manufacturers are at $1.1 per watt.
--But, again, factory capacity and demand won't move in perfect sync, so expect surpluses as time goes on.
"We could have oversupply as early as the second half of 2010," said Mehta.