Solar Status January 2009 Although solar energy has not reached grid parity in energy costs the industry has seen 50% annual growth the last several years. The combination of high energy costs primarily driven by high oil prices and the relatively favorable incentives offered by many governments has driven this boom.
The solar cell producers have looked at the rapid growth in the market and responded with massive investments in increased solar cell production capacity. Year end worldwide solar cell manufacturing capacity was 8.3 GW in 2007 and is forecast to end 2008 and 2009 at 14.5 GW and 22.2 GW respectively. In 2009 we believe that the combination of lower economic growth, lower oil prices and therefore lower energy costs coupled with less favorable incentives will slow the rate of growth in the solar market to 40% or less.
While the growth rate in solar energy installations is slowing the rate of new capacity installation for solar cell production reached 75% in 2008 and is forecast to be 54% in 2009. Solar cell factory utilization rates that were 59% in 2007 are forecast to have fallen to 50% in 2008 and to further fall to 40% or less in 2009. Underutilization of installed capacity presents a significant risk of rapidly declining solar cell prices in 2009 as producers attempt to fill their new factory capacity and absorb overhead costs.
To learn more about solar cell production capacity and demand we recommend the Solar Watch Database.
