Market research firm iSuppli Corp. now expects a major decline in the photovoltaics industry in 2009, due to massive overcapacity, plunging prices and weak demand for solar as a consequence of the global economic recession. Worldwide PV system installations are forecasted to decline to 3.5GW in 2009, down 32% from 5.2GW in 2008. A 12% reduction in the average price per solar watt will also impact global PV revenues, which will drop by a massive 40.2% to $18.2 billion, down from $30.5 billion in 2008.
The 500MW cap imposed in Spain, prompted by the massive 2.5GW-plus growth seen in Spain last year, is a key contributor to the decline in installations as emerging markets are not expected to fill the void for 2009. Indeed, Dr. Henning Wicht, Senior Director and Principal Analyst for iSuppli, believes the impact will continue into 2010, limiting global revenue growth to 29.2% for the year.
“For years, the PV industry enjoyed vigorous double-digit annual growth in the 40 percent range, spurring a wild-west mentality among market participants,” said Dr. Henning Wicht, senior director and principal analyst for iSuppli. “An ever-rising flood of market participants attempted to capitalize on this growth, all hoping to claim a 10 percent share of market revenue by throwing more production capacity into the market. This overproduction situation, along with a decline in demand, will lead to the sharp, unprecedented fall in PV industry revenue in 2009.”
The good times are expected to return, but not until 2011 and beyond. Revenue growth of 57.8% is expected in 2011, followed by similar levels through 2013 as both demand and supply become more balanced. Wicht noted that there would be fewer new entrants into the market place and a slowdown in new capacity coming on stream.
“PV remains attractive because it continues to demonstrate a favorable Return on Investment (RoI),” noted Wicht. “Furthermore, government incentives in the form of above-market feed-in-tariffs and tax breaks will remain in place, making the RoI equations viable through 2012. Cost reductions will lead to attractive RoI and payback periods even without governmental help after 2012.”
Lower prices due to productivity drives and lower polysilicon prices will contribute to overall cost per watt reductions further opening new markets, Wicht said.
Overall, the shakeout could be good for the industry as it would then have a more mature and orderly supply chain.