maandag 11 oktober 2010

The solar pv industry: will anything stop the optimism?

Almost all manufacturers of silicon, solar wafers, solar cells and modules have announced capacity expansions for 2011. Some even claim that they are already sold out for 2011. The solar industry is full of optimism. There is good reason for that. This year the global solar industry will see its sales almost grow 60% compared to 2009, which was already a record year with more than 70% growth compared to 2008.

There seems to be an unbeatable optimistic feeling within the solar pv industry. Solar PV is taking an unprecedented growth path. Capacity expansions are announced every day. And even as we speak, new manufacturers throughout the supply chain are entering the market. Who and what will stop this industry and solar energy on its way to become a major energy source? 
I know, capacity is not production, and Press Releases about capacity expansions are just Press Releases. But you don’t announce or build new capacity, if you are not optimistic about the near term solar business future.

The ‘what if’ scenario
In my thoughts, I have to admit, sometimes I have some doubts. Haven’t we seen such unstoppable optimism before in some other industry, just before a force majeure leads to severe market and industry corrections? Has anyone considered where all the modules will go next year and in 2012? What if German politicians pull the break and this major market, which covers 55% of the world market, will shrink instead of grow? What if a new Italian government will change the Conto Energia? After all, Italy has an unbeaten record of governments changing almost once a year on average, since the middle of last century…What if the double dip economy crisis will hit the US? And what if France caps its market to 500 MW next year? And if the Czech Republic disappears out of the top-10 markets in 2011? And what if all of this happens at the same time? Am I too much of a negative pessimist here?

The party has just begun
Maybe I am just too much influenced by the renewable energy policy changes in my own country. By the status of our government as unreliable partner and the common phrase among businesses: “Never trust the government”. The global solar PV market market development is still 99% dependent on subsidies and feed-in tariff incentives  initiated by governments. Isn’t the global solar industry just a little too positive about the governments in all the fore mentioned countries?
On the other side, more and more countries are just starting off with incentive schemes and even if some countries pull the break, there are more than 100 countries which have not even thought about supporting PV financially. Besides, PV is getting cheaper every year, so we will be arriving at grid-parity shortly. The party time only just began.

Cumulative board room expertise
But, more importantly, all these capacity expansions and all these new market entry decisions will be based on serious board room discussions. Based on business market studies, market surveys, consultant and investor advise, internal expert knowledge, sales trend analysis and well examined business plans with complex Excel spreadsheet models. These decisions will be based on the cumulative knowledge of all the involved internal and external solar industry experts. All of the industrial players together can’t be wrong, isn’t it? They probably know that they can produce a solar ingot, wafer, cell and module much cheaper than today’s market price. They know that even if the leading German market will face another 22% Feed-in tariff reduction in 2012, profitable production is still feasible. They probably know that mass production is still profitable even at a price level necessary to achieve grid parity in major markets like Germany and the USA. They will have to know, because grid parity is only a few years away and these new production equipment and plants normally are written off in less than 7 to 10 years.

So, if all these experts know where to go, there should be good reason to be optimistic. I will need to push away this little voice in my head that has some concerns. After all, photovoltaic solar energy is an infinite energy source, so why can’t we be on a route to infinite growth?

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