The solar sector will face some intense headwinds in 2012. Despite obstacles, the solar market may add at least 25 GW of new capacity in 2012. In North America the market for photo voltaic solar panels has a projected compounded annual growth rate of 42 percent between 2011 and 2015.
Last year was tough for US solar manufacturers. They were forced to reduce prices, decrease margins, close some manufacturing facilities, or even declare bankruptcy. In the 2011 solar market we saw increased manufacturing capacity but we also saw higher silicon supply, lower demand, oversupply and limited credit availability. Perhaps most significantly solar module prices experienced a sharp decline in part due to low cost Chinese PV cell manufacturers.
However, lower module prices have helped reduce the price of solar energy, making solar more competitive with other forms of electricity generation. Today’s manufacturing cost per watt can be as low as US$0.82. These prices can be expected to keep declining particularly as US homeowners are buying solar panels.
The reality of mainstream global grid parity is getting closer in the solar sector. The declining price of solar has allowed it to grow even in the unsubsidised markets in some emerging economies.
These challenges have not as yet affected overall investment in solar energy. Module prices are expected to further decline over the next five years. This will make solar energy more affordable even in the absence of subsidies.
Regardless of the economic environment, we can expect to see rapid change in renewable energy market and this is particularly true of photo voltaics.