After Gutenberg

jcwinnie

For World Watch Institute, Janet L. Sawin provides an excellent summation of the status of the global photo voltaic market.

Global production of photovoltaic (PV) or solar cells-which convert the sun’s light directly to electricity-increased 51 percent in 2007, to 3,733 megawatts. According to early estimates, more than 2,935 megawatts of solar modules were installed that year, bringing cumulative global installations of PVs since 1996 to more than 9,740 megawatts-enough to meet the annual electricity demand of more than 3 million homes in Europe. Over the past five years, annual global production of PV cells has increased nearly sevenfold, and cumulative installations have grown more than fivefold.

Europe-led by Germany-passed Japan to lead the world in PV manufacture, producing an estimated 1,063 megawatts of solar cells in 2007, up 56 percent over 2006. About 40,000 people are now employed in the PV industry in Germany alone, and the German company Q-Cells outproduced Japan’s Sharp to become the number one manufacturer worldwide.

Germany remains the world’s top PV installer, accounting for almost half of the global market in 2007. Thanks to the country’s feed-in tariff for renewable electricity, which requires utilities to pay customers a guaranteed rate for any renewable power they feed into the grid, Germans installed about 1,300 megawatts of new PV capacity, up from 850 megawatts in 2006, for a total exceeding 3,830 megawatts. As capacity has risen, PV installed system costs have been cut in half in Germany between 1997 and 2007. PVs now meet about 1 percent of Germany’s electricity demand, a share that some analysts expect could reach 25 percent by 2050.

Japan continued to produce more PV cells than any other individual country, with 920 megawatts manufactured in 2007. But Japan’s share of the world total fell from 37 percent in 2006 to just below 25 percent. Unable to compete with China and Taiwan for low-cost solar cells, Japanese manufacturers have changed tactics and are looking beyond conventional crystalline silicon cells to thin-film technology. Domestic installations in Japan declined from 286 megawatts in 2006 to an estimated 230 megawatts in 2007.

China climbed rapidly to become the second largest cell-producing nation after Japan, manufacturing about 820 megawatts of PVs and accounting for 22 percent of global production. But annual production capacity reached almost 1,590 megawatts by the end of the year, well ahead of any other country (though still 9 percent below all of Europe). Despite these impressive numbers, the Chinese market for PVs remains small, and much of the 20 megawatts of new capacity installed in 2007 was for remote off-grid applications. Taiwan is also experiencing dramatic growth in production, manufacturing 368 megawatts of cells in 2007 and ending the year with the capacity to produce 710 megawatts annually.

Spain ranked second after Germany for total installations in 2007 but accounts for only an estimated 3 percent of global production. According to estimates, Spain added anywhere from 425 to 640 megawatts in 2007, up from fewer than 100 megawatts in 2006. This puts the country well ahead of the government’s official target of 400 megawatts by 2010. The market in Spain is being driven by a strong guaranteed price for PV electricity.

In the United States, cell production rose 48 percent to 266 megawatts. Although this represents a dramatic increase in production from the once world-leading U.S. solar industry, the nation’s shares of global production and installations continued to fall in 2007. PV cell production accounted for only 7 percent of the global total, down slightly relative to 2006. But U.S. manufacturers are now focused on the “next wave” of solar technologies: in 2007, the United States accounted for approximately two thirds of global thin-film production.

An estimated 150 megawatts of new gridconnected PV capacity was installed in the United States in 2007, up about 45 percent over the previous year, putting the nation in fourth place for total capacity-behind Germany, Japan, and Spain. California continued to dominate the U.S. market, though growth was slower than expected because of changes in state incentive levels and a weak dollar. U.S. utilities are beginning to recognize the potential value of solar PV: in early 2008, Southern California Edison announced plans to install 250 megawatts of distributed capacity over the next five years.

Other countries becoming major players include Italy (25-50 megawatts installed), South Korea (50 megawatts), and France (45 megawatts), all thanks to new or strengthened feed-in laws. In addition, India installed an estimated 20 megawatts, and Portugal added 10 megawatts. Some of Portugal’s additions were part of a large solar plant that came online in early 2007 and will generate enough electricity to meet the needs of 8,000 households.

Such strong growth occurred against a backdrop of polysilicon shortages-supply has been tight since 2005, driven mainly by strong policies pushing demand growth. However, significant new capacity will start to come online in the second half of 2008. The European Photovoltaic Industry Association projects 80,000 tons of annual production by 2010, up from just over 37,000 tons in 2007. Some analysts are predicting excess capacity within the next few years, and in early 2008 China-based Trina Solar canceled plans for a new 10,000-ton polysilicon production facility.

The current shortage is driving advances in thin film technologies, which require no polysilicon. Thin films are composed of very thin layers of photosensitive materials and require less energy and materials to make than conventional silicon-based solar cells and are cheaper to produce. They can be integrated into roof shingles, siding, and the windows of buildings. After decades of market disappointment, thin-film production has increased nearly fourfold in the past two years, claiming more than 10 percent of the global market in 2007.

Performance data for such technologies are relatively limited, and efficiencies remain low compared with conventional solar cells. But the situation is rapidly improving-commercial efficiencies rose from 9 to 10 percent in 2007, and in early 2008 researchers at the U.S. National Renewable Energy Laboratory set a new record at 19.9 percent efficient, close to commercial levels for conventional cells. Because of the potential for dramatic cost reduction, many researchers view thin films as the future of solar. The solar industry attracted $3 billion in equity during 2007, with some of the biggest investments going to young solar companies in the United States and to thin-film technologies.

Scientists are also working on a range of third- and fourth-generation PV technologies. German researchers have developed a prototype solar module that uses organic dyes combined with nanoparticles, applied to glass with a screen printing technique, to generate electricity. Konarka Technologies successfully conducted its first demonstration of manufacturing PV cells with ink-jet printing in early 2008. And companies in the United States and Europe are exploring ways to turn road surfaces into solar power generators.

Thanks to economies of scale, rising conversion efficiencies, and more-efficient use of polysilicon in conventional cells, average PV module prices declined in 2007, even as polysilicon prices rose. Stronger than expected demand growth in Spain helped keep global PV prices higher in 2007 than some had predicted. But analysts and industry leaders alike expect continued price reductions in the near future through further economies of scale and increased optimization in assembly and installation. The Prometheus Institute projects that installed system prices for large projects will fall 50 percent by 2010, to $4 per watt peak (without incentives) in the best locations.

Solar electricity is likely to become cost-competitive with the retail price of electricity in many parts of the world in the next several years. As Jesse Pichel of New York’s Piper Jaffray said recently: “Whether it’s 2010, 2012, or 2015, I think everyone can see the writing on the wall.” When solar becomes competitive with conventional power, “solar power demand is infinite.”