Photon International Magazine reported on a conference of solar cell companies held in April 2007 according to the second quarter report of the New Alternatives Fund, one of my vast and extremely lucrative investments (or so I hope).
The conclusions of the report were that silicon supply growth is coming on faster than anticipated, costs are coming down faster than expected, and global demand is more robust than expected.
Photon also reports that silicon production for 2006 was 41,000 tons and by 2010 should be at least 120,000 tons. Dow Corning, for instance, states that they will increase production 80% by 2010. I believe it was only last year that solar surpassed computers as the majority user of silicon.
Photon says that the cost of solar PV electricity is now $0.25 per kWh and that by 2010 is projected to be $0.15 or $0.10. Solar cell production is growing faster in China than any other country.
You can compare this to another Photon report on the world solar electric market from 2004 by Michael Rogol, "Solar Power through 2020: Potential and Challenges."
In that report Rogol said that solar has had 23 times growth in the last decade and is poised to have 25 times growth in the next. Solar electric has maintained a consistent growth rate of about 33% per year since 1994 which is rare in a business sector. However, there are great challenges that will have to be met by 2015 and after in order to maintain such levels of growth.
Last decade's growth is concentrated in the OECD, not the developing world. The vast majority of PV is grid connected and the major markets are Japan, Germany, and California. 92% of the solar electricity installations in Japan are on rooftops and the figures are commensurate in Germany.
The price of PV has fallen by about 7% per year and has, until now, been passed on to the consumers. In the next few years, due to increased demand, all of those continuing price reductions will not be passed on to consumers meaning that the producers will be able to accrue profits.
The next decade looks good for solar because the residential grid price is increasing, the cost of solar is falling, the government incentives for solar are rising with $1 billion in Japan this year and about $500 million, half Federal and half state, in the US. What may become a difficulty is rising interest rates. A 3 to 5% increase in interest rates would be trouble. However, this is balanced by the fact that some government subsidies include locked in low interest rates. Another difficulty on the horizon will be the response of generating companies to solar peak shaving. Small peaks in demand tend to trigger much larger price increases. Solar shaves summer peaks and thus cuts demand and prices increase for generating companies. There is already an impact on Japanese generating company profits. At some point, they will have to react. [Reportedly, the Japanese government has removed incentives for solar electricity as PV has become cost competitive without them.]
Solar electricity is already a $7 billion industry worldwide and the average cost is $7 per watt installed. $3 of that is module cost and the rest is the accompanying electronic controls, installation, design, licensing, and miscellaneous. Sharp's PV module business is $1 billion this year and will be $2 billion next year. It is their second largest growth platform after LCDs.
Solar accounted for about 4% of all refined silicon five years ago and now accounts for 25%. There are six companies that produce 90% of the world's refined silicon, 28,000 tons. They are beyond full capacity now and the prices are rising due to expanding demand in both the electronics industry and the solar industry. Silicon for electronics is more refined than that used for solar and some of the rejected electronics silicon is transferred to the solar sector, perhaps 10% of the total used in solar.