Power Electronics

Study Forecasts Billion Dollar Market for Photovoltaics in 2010

The demand for photovoltaic (PV) modules in the U.S. is expected to more than triple from 2005 levels in 2010 with shipments of PV modules equaling 531 megawatts (MW) of generating capacity, and $1.3 billion in revenue according to a recent study by the Freedonia Group, a Cleveland-based market research firm. In its 274-page report, “Solar Energy Products,” the firm charts the growth of photovoltaic modules and cells in the U.S. market, identifies the factors driving demand for solar power and the key manufacturers who build and sell in the U.S. market. The study also projects a changeover in technology for PV cells as vendors transition from crystalline to thin film materials and processes.

The report finds that the growing demand for PV products will be driven by the falling price of solar power, which stems from technological innovations, growing economies of scale and a rising level of government tax incentives and rebates at both the state and federal levels. However, the study cautions that if these incentives are scaled back or withdrawn prematurely, it would negatively affect demand for solar energy products. Gains will also be spurred by consumer interest in renewable energy sources and concern about the volatility of oil and other conventional energy prices and supplies. Another factor cited as driving growth is the widespread implementation of net metering programs in which consumers are compensated at retail prices for any excess energy generated that flows onto the grid.

In the near term, advances will be slowed by a shortage of polysilicon, according to the Fredonia Group. This trend is slowing price declines and limiting the ability of manufacturers to produce enough cells to accommodate demand. However, this shortage is likely to fade by 2010 as silicon producers complete planned expansions and as newer PV technologies that use little or no silicon become more widely used. Gains will also be constrained by the rate at which cell and module manufacturers can increase production capacity.

In 2005, U.S. shipments of PV cells were dominated by single- and multi-crystalline silicon cells which accounted for 76% of shipments in terms of generation capacity (see Table 1). However, thin films will post stronger growth, advancing to more than eleven times their 2005 level by 2010 as more manufacturers begin large-scale production. Thin film materials include amorphous silicon, cadmium telluride, gallium arsenide, and copper indium diselenide or copper indium gallium diselenide.

Table 1. Forecast of PV Cell Shipments and PV Module Demand (courtesy of The Freedonia Group)

2000

2005

2010

Percentage Annual Growth, 2005-2010

PV Cell Shipments
(expressed in peak megawatts)

Total shipments

68.1

215.9

935

34.1

Crystalline Silicon

66.0

164.7

360.0

16.9

Thin Films

2.1

51.2

575.0

62.2

PV Module Demand (million dollars)

106.8

526.0

1275.0

19.4

Gains in thin-film PV cells will be driven by the cost advantages involved in using little or no silicon, and the ability to use thin films in building integrated photovoltaic applications within roofing shingles and other building materials.

In addition, to forecasting PV demand by technology the study also broke out PV module demand by region (see Table 2) as well as the major players in the U.S. PV market. The list of leading suppliers of PV modules in the U.S. includes Sharp (Japan), BP (United Kingdom), Kyocera (Japan), Energy Conversion Devices (Auburn Hills, Mich.), Schott (Germany), Sanyo (Japan), Solar World (Germany) and SunPower (Sunnyvale, Calif.).

Table 2. Regional Demand for PV Modules, expressed in peak megawatts
(courtesy of The Freedonia Group)

1995

2000

2005

2010

2015

Electric generation PV Module (total)

3.4

12.7

140.1

475.0

1025.0

Northeast

0.3

0.8

11.9

46.6

108.0

Midwest

0.1

0.4

4.1

15.7

37.0

South

0.1

1.5

17.2

65.7

152.5

West

2.9

10.0

106.9

347.0

727.5

The study focused exclusively on PV cell and module manufacturers that sell in the U.S. and that have a manufacturing plant in this country. However, the Freedonia Group plans to study World PV market demand next year including manufacturers in Germany and China that primarily serve those markets.

In 2005, the key market for photovoltaic modules (which are composed of a series of cells) was power generation, accounting for 85% of demand. The on-grid segment represented the largest share of demand, benefiting from net metering programs implemented by state governments and local utilities, and a system which does not require batteries and supplemental generators. The Solar Energy Products report is available for $4,300. For further details, contact Corinne Gangloff by phone 440-684-9600 or e-mail [email protected] or see www.freedoniagroup.com.

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