While the solar industry has been shining bright over the past few years, the industry’s forecast isn’t all sunshine, according to a report issued Thursday morning from Lux Research. Even though solar revenues are expected to more than triple to $70.9 billion in 2012 from $21.2 billion in 2007, solar supply will exceed demand as soon as 2009, according to the report. And that means large solar players, namely firms that produce traditional crystalline photovoltaics and haven’t invested in new technologies like solar thin film, will have some storms to weather.
Well, the tipping point had to come. There’s been a shortage of available solar-grade polysilicon, the key ingredient to traditional solar panels, but that polysilicon constraint will start to relax next year and end in 2010, says Lux, which looked at 133 polysilicon construction projects currently in the works. And with enough polysilicon to meet — and exceed — demand, combined with the recent aggressive pace of installations in countries like Japan, Germany and Spain, demand for solar installations will reach 8.96 GW in 2009, while solar supply will reach 9.57 GW.
The pendulum swing is also due, in part, to new technologies that don’t rely on polysilicon, such as thin-film solar, which uses a variety of non-silicon materials printed on flexible bases, and solar thermal, which uses the sun’s heat to produce electricity.
The solar horizon will look cloudy for a few years to come, says Lux. There will be oversupply through 2012, when they project a demand of 20.3 GW worth of installations vs. a supply of 21.2 GW.
Those in the tech industry know what it feels like when a bubble bursts. Michael LoCascio, senior analyst at Lux Research, puts it simply when he says:
While sales volumes, measured in megawatts, will continue to increase, average sales prices will fall. The result is that revenues for crystalline silicon PV will drop on a year-over-year basis in 2010 for the first time in memory – which will cool the enthusiasm for venture capital funding and IPO events.
Yeah, that’s the sound of the solar bubble popping.