General Information on the PV Market
Posted May 21, 2008on:
Markets and Opportunities
The worldwide demand for solar-grade silicon is currently 18 MM kg/yr and growing 35% to 40% annually. The demand for solar grade silicon is expected to exceed 24 MM kg/year, next 3 years, of which no more than 8 MM kg/year is foreseen to be available from non-Solar Sciences sources. While a number of new plants have been announced careful review shows that the preponderance are producing electronic grade for chip manufacturers with small allocations to the solar industry. Consequently, the solar industry will continue to compete with the electronics industry for highly-refined silicon feedstock; and spot prices will remain high; currently US $100-300 per kilo.
According to Photon Consulting’s 2006 Solar Annual report, production growth in the solar power industry is strong and demand should significantly exceed supply through 2010. Currently, the global demand for solar energy is approximately 5 GW and Photon Consulting expects underlying demand to reach 8 to 10 GW by 2008, a 530% growth increase from 2005.
Detailed economic analyses and estimates of the future market for solar energy are also available from the US Department of Energy (DOE). In the past, the photovoltaic industry has relied on the semiconductor industry as a source of high-purity silicon. Semiconductors, e.g. transistors and integrated circuits, require ultra-high purity silicon (99.99999%, 7N+ or more purity). Scrap and off-spec silicon from semiconductor manufacturers is often of sufficient purity (99.9999%, 6N+ or more) to be used in photovoltaic cells.
The PV industry’s reliance on the semiconductor industry, however, leads to high volatility, cyclical exposure, and overall increased market risk. For example, a down-turn in the semiconductor market in the late 1990’s and early 2000’s resulted in a reduction of new ultra-high purity silicon manufacturing capacity being brought online. The reduced capacity combined, with a recent up-turn in the semiconductor market and more efficient processes have resulted in a high price for scrap silicon used by photovoltaic cell manufacturers. Even as demand for solar power grows, the dependent relationship on the semiconductor industry has become a limiting factor for PV supply.
Worldwide, the PV industry sold over $15 billion of new product in 2005, continuing a five-year trend of 30%+ annual market growth. Thanks to R&D programs and major capital investments in manufacturing, solar PV costs 1/10 what it did in the 1980s. Each doubling in cumulative manufacturing has brought prices down by ca.18%. With electric rates and natural gas prices skyrocketing nationwide, if manufacturing continues to scale up and significant R&D commitments are made, continued progress will bring rooftop solar costs below retail electricity rates
However, while worldwide production of PV cells increased by 45%, the United States – once the global leader in PV manufacturing – fell in market share from 11 percent in 2004 to less than 9 percent. The surging player in the industry was China, which increased production from 51.8 MW in 2004 (4.1% market share) to 150.7 MW (8.3%) and now trails the US by the slimmest of margins. Japan remains the dominant country in PV manufacturing.
The Global demand for solar purity silicon has, for the past decade, experienced a 35% annual growth rate. The growth rate is projected to continue at a compounded annual 35% growth rate for the next decade.