Solar power could be on a par with the cost of fossil fuels by 2013, although not all players in the industry face a sunny future, market analyst Pike Research said in a new report.
The grid parity scenario – or the point at which electricity produced from renewable sources such as solar becomes equal to or cheaper than available electricity supply running in the power grid produced mostly from cheap coal – will be made possible by a number of factors, Pike’s Global Solar Energy Outlook released this week shows.
These factors include dwindling solar cell prices, increasing solar energy demand, the global financial crisis and the recent abundance of polysilicon.
“Solar prices are plunging quickly, and lower pricing will fuel a surge in demand in 2010 and beyond,” said Dave Cavanaugh, senior analyst at Pike.
It estimated that solar demand will increase at a compound annual growth rate of 24 percent between 2010 and 2013 and will reach 19.3 gigawatts by the end of the period.
Studies on solar power cost have painted a generally hopeful picture of the industry. In May, Germany-based solar integrator Phoenix Solar predicted that countries like Singapore could attain solar grid parity by 2014 because of lower solar installation costs and higher traditional grid power costs.
Singapore’s PV installation costs range from 3.50 Singapore dollars to 4 Singapore dollars ($1.65 to $1.88) per watt, while installation costs for large grid-connected systems are about 5 Singapore dollars to 6 Singapore dollars per watt.
Last year, another study released by solar companies adviser Photon Consulting estimated that the solar industry will achieve its $1-per-watt target by 2012. The consultancy based its findings on the performance of big solar companies such as First Solar, REC, Q-Cells, Solar World, SunPower and Suntech.
But the fortune of other individual players in the generally optimistic industry will not be the same, Pike said. “Pricing trends and oversupply of solar modules will also place huge pressure on solar suppliers, especially Tier 2 and Tier 3 companies that are not well-equipped to weather the storm. We expect a significant shakeout among solar suppliers in the next two years,” Mr. Cavanaugh said.
The oversupply will cause certain market realignments while spawning an era of solar growth over the coming years, Pike said.
In this market environment, Mr. Cavanaugh said a number of key factors will determine the success and survival of solar suppliers. This will include the cost of polysilicon wafers, process materials and processing, economies of scale, market presence in key growth countries, supply chain integration and strong balance sheets, among others.
