Global PV market growth faced with price increases

2004 saw the continuation of the rapid growth in the global solar PV market. Cell production increased by 67% and the level of cumulative installed PV power rose by 30%. In spite of this, market demand continues to exceed supply! The elation brought by this continuing success is being dampened by the current shortage of PV modules and the resulting price increases. This phenomenon applies not only to modules but also to the manufacturers and suppliers. It is now a case of ‘find and be found’ in this type of market environment, which is why we are highlighting the Trading Floor and the market directories in this third edition of the SUN.

The module shortage can not be attributed to the global module production capacity. New module production facilities are opening up at an incredible rate and there are already over 200 companies manufacturing PV modules. The problem is found higher in the distribution chain where a shortage of silicon feedstock for the solar industry has been identified. A lack of silicon is hindering the production of wafers, solar cells and modules. Investment in solar silicon production plants has failed to keep pace with the continued market demand for solar cells and modules. New silicon plants require high investment and as such can only be viable for specialized industrial companies. Industry experts foresee the current growth in available silicon for the solar industry will not be able to match the growth in the market demand for solar cells and modules until 2007. This will inevitably result in price increases in the supply chain leading ultimately to higher module prices for the consumer. These price increases could increase in a loss of consumer interest especially when coupled with the planned annual reduction of the payback rates, as is the case in Germany. This development may stabilize supply and demand, however the inevitable increase in silicon production may have a more serious effect as this could lead to a surplus of solar cells and modules. It is quite possible that this surplus could result in sharp falls in PV module prices. This situation would make it extremely difficult for the smaller module manufacturers to compete with the large module manufacturers. This can only be avoided by entering new markets and with the introduction of new attractive module and system prices. Furthermore, who is able to predict oil price changes and global political situations for the coming years? One thing is certain, the PV market is still in its infancy and will remain dynamic for the next years, it is therefore vital for the market players to stay tuned!