Will the second half of 2010 look like the first half of 2009? That’s the big fear in the solar industry, according to speakers at the 2010 Solar Summit sponsored by Greentech Media.

Solar is growing. Make no mistake. Globally, 9 gigawatts of solar may get deployed this year, according to GTM Research. That would be 50percent growth over 2009. But declining prices for panels and factorycapacity will squeeze margins. And changes to subsidy programs maycreate a situation where demand slows as the year goes on.

"That’s what we are all holding our breath about," said Jim Pierobon, vice president of policy and marketing development at Standard Solar, during a meeting in the hallway.

As usual, the big factor determining the health of the industry isGermany. In the first half of 2009, only around 500 megawatts of solarwere installed in Germany. In the second half of 2009, approximately 2.5 gigawatts of solar were installed in the country, according to GTMResearch senior analyst Shayle Kann.

"That’s a fivefold increase in the second half of the year," he said.

Germany, however, is set to readjust its feed-in tariff on July 1.The tariff for rooftop installations will likely decline by 16 percentand 11 percent for ground-mounted installations. The industry may notsink into the funk it found itself in in 2008 and 2009 as the Germanmarket slows, but it will likely, palpably slow.

"Germany will quickly lose its shine in the second half," said Kann."There is a rush to get projects (in Germany) in the ground now."

What does this mean for module makers? By the middle of the year,modules might sell for $1.50 to $1.75 per watt in Germany. But if demand dips, the prices may have to dip toward $1.35 a watt in Germany. Noteveryone will be able to sell at that price and make money, said Kann.

How bad the drop is depends on a variety of factors. Italy could soak up a lot of modules coming out of factories. Italy installed 544megawatts of solar in 2009 and 47 percent of that total came in the last two months of the year, Kann said. The margins for independent powerproviders in the country is quite healthy, helped in part by high prices for conventional power in Italy. Up to a gigawatt could get installedin Italy this year.

"But it can’t replace Germany," he said.

The U.S. market will likely grow by nearly 50 percent with 830megawatts of solar planted on roofs and in the ground this year.Subsidies in five states–Hawaii, Massachusetts, New Jersey, Californiaand New Mexico–have even created a situation where solar in commercialinstallations can actually cost less than grid power. A commercial solar installation in Hawaii could be constructed to produce power that is 17 percent less than power from the grid. Power from hypotheticalcommercial installations in New York and Nevada are only two percent ofgrid power, when all subsidies are factored in. Over time, the U.S. will be the largest market in the world.

"We’re going to see this widespread grid parity on a subsidizedbasis" in the U.S. said Kann.

But again, the united nations of solar may not be enough to offsetthe anticipated torpor on the Rhine in the second half of 2010. Grid"parity" may also be a heading toward false summit, said Marc Romito,renewable energy program manager for Tucson Electric Power, unlessissues like grid interconnection can be worked out. 

Other interesting tidbits:

–U.S. solar manufacturing will continue to grow. In 2008, only 17 PV manufacturing facilities existed in the U.S., said GTM analyst ShyamMehta. By 2012, there could be 51, judging by plans already announced.

–170 thin film manufacturers exist, but only a few will ever becomefull-fledged, mass-manufacturers, according to Mehta. Twenty newamorphous silicon manufacturers came into the market last year.

–By 2015, silicon solar panels should cost 80 cents per watt whilethin film solar panels should average around 55 cents a watt. The bestamorphous silicon makers can produce modules for $1 now, said Mehta. The few copper indium gallium selenide (CIGS) manufacturers are at $1.1 per watt.

–But, again, factory capacity and demand won’t move in perfect synch so expect surpluses as time goes on.

"We could have oversupply as early as the second half of 2010," saidMehta.

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