Greentech Media

The worldwide shortage of solar-grade silicon continued to be the defining trend in the solar industry in 2007 (see Solar's Silicon Shakeup, Solar Margins About to Shrink?, Panelists Debate When the Silicon Shortage Will End, Is Solar Shortage Easing, Silicon Setback, Silicon Shortage Has Big Impact and Silicon Steals the Spotlight, Again).

Solar outstripped semiconductors as the top user of the precious stuff this year (see Clean Break post). And throughout the solar industry, the shortage made itself felt.

New entrants, such as those from China, suffered the most. LDK Solar, for instance, saw its shares lose more than half their value when it faced allegations it had misstated its silicon inventory (see LDK Says Inventory Discrepancy Allegations Have 'No Merit' and New Details Surface As LDK Shares Continue to Plunge.) An independent audit found no material errors, but share prices still fell when the company posted lower-than-expected margins, and the company still faces a U.S. Securities and Exchange Commission investigation and shareholder lawsuits (see LDK Profits Jump 40%, Independent LDK Audit Finds 'No Material Errors', LDK Shares Rise Despite Class-Action Threat and LDK Says SEC is Inquiring into Inventory Discrepancy Allegations).

Trina Solar and China Sunergy also saw lower margins and share prices because of a lack of silicon contracts (see Could China Steal the Solar Throne?, Trina Solar Shares Fall 20% on 3Q, Trina Solar Shares Sink, China Sunergy Troubles Continue and China Sunergy Disappoints). Even SunPower saw falling margins, although shareholders didn't punish them the way Trina and Sunergy shareholders did (SunPower Margins Fall; Income Beats Expectations). Conergy's shares plunged, leading to CEO Martin Rüter's resignation, and Shell sold the last of its crystalline solar operations (see Conergy's CEO Steps Down and Shell Sheds Solar).

To hedge against shifting profit margins, SunPower bought another installer, and even First Solar -- the star of the year -- diversified into installation with the purchase of Ted Turner's company (see SunPower Gets Some Italian Sun and First Solar Buys Ted Turner's Company for $34M).

In spite of the shortage, which solar entrepreneurs say has constrained growth short of demand, the solar industry grew rapidly this year.

Michael Rogol, managing director of Photon Consulting, projects that global solar sales -- including all components, such as modules -- grew 47.5 percent to an estimated $26.4 billion this year, from $17.9 billion last year. In megawatts, cell and panel production grew 50 percent in 2007 to 3.9 gigawatts, up from 2.6 gigawatts in 2006, he said.

Rhone Resch, president of the Solar Energy Industries Association, said 2007 was the year in which the U.S. market "became credible" to the rest of the world.

"We grew at a little over 70 percent in the U.S. and I think we developed credibility with respect to Wall Street, policy makers and the end user," he said, adding the Spanish market -- baited with new subsidies -- also really took off.

Part of that growth is due to thin-film solar technologies, which use little to no silicon. Thin-film manufacturing took off this year.

First Solar led U.S. solar production with 60 megawatts of production in 2006, expanding to 210 megawatts of capacity this year and announcing plans to add another 480 megawatts of capacity (see Thin Films Lead U.S. Solar Production, Thin-Film Solar Production to Leap Forward and Thin-Film Solar Gets Another Boost).

Plenty of entrepreneurs are in hot pursuit of the market. Nanosolar announced it had begun commercial production of more-efficient thin films in December, among other advances this year (see Nanosolar Begins Production, HelioVolt on Nanosolar's Heels, Thin-Film Solar Production to Leap Forward and Thin-Film Solar Production Keeps Growing).

But it isn't easy to make these films. Miasolé laid off about 40 employees, according to former workers, raising questions about its technology (Miasolé Layoffs Raise Questions About Technology, Former Miasolé Employees Confirm Cuts).