PV market outlook: A contrarian’s view

by James Montgomery, News Editor, Solid State Technology

July 30, 2008 – There’s a lot of optimism and interest crowding the photovoltaic space, and this was certainly the case witnessed at several Intersolar presentations during SEMICON West (Weds. 7/16), offering different takes on the direction of the PV market. The first of these offered a decidedly contrarian view about the future (or lack of it) for many PV businesses.

Eric Wesoff, senior analyst with Greentech Media, started his high-energy presentation by immediately changing its focus away from technologies and more toward the emerging PV market in general, calling it “innovation in a frothy market.” Few other markets offer the growth promise that PV solar does, tracking at 40% growth for the past decade (see Figure 1) and now a $20B market with promises of 30% annual growth “for decades to come,” he said. Most PV capacity announcements today tout hundreds of megawatts in the next year or two (notably Kyocera, SunPower, Schott, Yingli, and First Solar) with a few handful at the top planning gigawatt-scale production (including Q-Cells, Suntech, Solarworld, Brightsource, and Sharp), but it won’t be long before we’ll start hearing about (and requiring) terawatt-scale expansion, he said (see Figure 2).

Figure 1: Global PV market has shown consistent 40% growth. (Source: Prometheus Institute/Greentech Media)

The surge in interest in the PV sector has generated concern whether this is just another hot market bubble as has been seen in the past (e.g. telecommunications and the early Internet buzz). Wesoff sees no such “bubble” in PV, though there are some similarities, e.g., massive VC investments for technology brought forth prematurely from labs. He criticized the “irrational exuberance” among investors, noting that VC money in 1H08 amounted to $1B, with PV taking up 15%-20% of the entire VC asset class. Those other bubbles likewise saw a huge influx of VC money invested in premature technologies, and ultimately resulted in a limited list of survivors, successes, and technology advances, he said.

Figure 2: Cumulative solar installed capacity, in GW. (Source: Greentech Media)

The stampede of new entrants to get a piece of the PV market has generated a “herd mentality” among VC supporters who are scrambling to find the small handful of good IPO candidates, out of the lot which is already likely to include some well-known names such as Nanosolar, GT Solar, and even carmaker Tesla, Wesoff noted. He put up two slides stuffed with the names of >100 new entrants to the PV market — all of whom expect to grab the clichéd 10% marketshare in their PV technology niches, ranging from flexible substrates to quantum dots to inks. “For slightly used thin-film equipment by around 2009-2010, here’s your list of people to talk to,” he quipped. One company in particular Wesoff referred to as a “money oxidizer” whose infamous achievement to date has been a solar panel technology that utterly failed to work in sunlight. Another company has its eyes on another VC round later this year and projects a $1B valuation, without having shipped a single product or booked a single sale, he pointed out. These firms and many others seeking to make a name in PV, Wesoff scolded, are simply “prematurely liberated from the lab into a frothy market.”

For now it’s still too early and expensive for PV technologies such as CIGS and organics, with the mix still mostly silicon vs. thin-film (90%/10%, maybe moving closer to 80%/20%), Wesoff said (see Figure 3). But he reiterated that scale of production seems to be the main hurdle, not technical challenges.

Figure 3: PV technology breakdown by % and region. Note nearly half of all US production was thin-film based in 2005-2006. (Source: Prometheus Institute/Greentech Media)

Ultimately, it won’t be investors or technology that drives solar. Wesoff noted that in Germany, seen as a global leader in PV, the weather is generally ~200 cloudy days/year. Finding ways to better utilize the sun’s energy in such an environment isn’t what drives the market, he said — it’s establishing the political will to support such businesses and technology development and use. Session host Eicke Weber from Germany’s Fraunhofer Institute, frequent participant in various Intersolar talks during the week, was seen nodding in agreement from down the table. – J.M.

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