The question of wheresolarprices and margins will land in the coming years is keeping companies guessing.
Solaria CEO Suvi Sharma, for instance, expects a steady decline in silicon pricing that will lead to higher margins for solar-panel manufacturers and installers, as well as lower overall solar prices - perhaps around 5 percent per year - for buyers.
"I think we’re going to see fairly robust markets and demands and, therefore, some modest price declines over the next three to five years, and then we’re likely going to see faster declines after that," he said.
In the meantime, Piper Jaffray senior research analyst Jesse Pichel is predicting almost the opposite trend.
He forecasts that prices and margins will drop, while volumes grow, until 2010. That’s when he expects solar power to become competitive with conventional retail electricity prices. At that point, he expects demand will be through the roof, more than making up for the lower margins, and that margins and prices will stabilize.
Solar manufacturers are preparing for the possibility of a drop in prices for solar equipment if the shortage of solar-grade silicon, or polysilicon, ends. Some are diversifying into different parts of the market, such as SunPower, which bought Powerlight, a large solar integrator, in November and Conergy’s SunTechnics, which bought Aztec, a solar hot-water company, in August.
Some also are signing long-term contracts to sell their equipment.
Large German solar-cell manufacturer Q-Cells on Tuesday announced it had signed "multiyear" contracts with five Italian panel manufacturers: Brandoni Solare, Enerquos, Invent, Renergies and Vipiemme Solar. In August, Q-Cells signed a similar deal to sell about $170-million-worth of cells to Indian panel manufacturer Solar Semiconductor, while PV Enterprise, a Swedish panel manufacturer, signed a five-year agreement with German integrator Systemhaus Corona2000.
With so much at stake, we decided to ask European Photovoltaic Solar Energy Conference and Exhibition attendees what they think:
Edmund Stassen, Conergy board member: Grid parity most places within 10 years
"I don’t see a major drop in the market, but we have to reduce the price every year to comply with the 5-percent drop in the German incentive and we can do that easily with higher volumes. We’ve already got grid parity in some areas and some conditions, especially when you talk about off-grid, so it’s not really far away. In the next 10 years, we will have reached major grid parity for major parts of the world."
Raju Yenamandra, SolarWorld sales manager: Grid parity in some places within 10 years Solar pricing is going to remain stable for the next year. With the silicon supply shortage, prices are not going to drop. But once the supply is there, it will have the ability to affect the price structure. Where people are making informed choices on where their electricity comes from, like in California [and Germany], I would say solar could reach grid parity, without subsidies, in less than 10 years."
Peter Aschenbrenner, SunPower vice president of marketing: 50-percent drop in five years "It’s part of our mission statement to reduce cost 50 percent by 2012, and if we have a [government] policy that makes sense, prices should move in lock step. In general terms, we think there’s a lot of room for cost reduction. We’re really bullish on the industry in general, and our company, getting costs down."