Solar panels, the critics say, will never be cost effective. Even with improved technology, or larger, more efficient manufacturing facilities, they can’t compete with coal, natural gas or nuclear anytime soon. Research firm iSuppli has another story: Solar panels, they say in a new study, will be on par with the grid in 2012, four years from now.
That’s only for for rooftops in regions with “plentiful and constant” sunshine, mind, but areas with only moderate amounts of sunlight (like Germany, the world’s solar capital) are expected to catch up within six years.
While some companies have predicted equally speedy grid-parity, iSuppli is a major research firm known worldwide for tracking consumer products, and components like displays and semiconductors. Its attention to photovoltaics is an acknowledgement of their growing importance — in fact, the report says, photovoltaic manufacturing will be on par with the semiconductor industry even sooner, churning out 12 gigawatts of panels a year by 2010.
That’s a slightly larger supply than some other studies have predicted, and according to many analysts, that growth should be a reason for worry in the solar industry. Most predictions put supply well ahead of demand, a scenario that would force prices down, and some companies out of business. But it appears that manufacturers are anticipating being able to handle the shock; those surveyed for the report expect their sales to increase by as much as 50 percent each year over the next few years, and several are planning massive gigawatt-scale manufacturing facilities.
In part, that confidence is likely because of the grid parity issue, which could significantly change the equation. Analysts typically predict measured, formula-based demand curves based on standard economics. That doesn’t take into account market demand driven by unforeseen issues, like skyrocketing electricity prices, and growing consumer awareness of issues like global warming.
In fact, most of the solar installers and service companies that I’ve spoken with say that interest in having solar installed is higher than reports suggest — and where solar is pushed, sales are also higher than expected. Consumers simply aren’t aware yet of all the different options for installing solar — although that, too, is changing. And some are simply waiting for a better deal.
When solar panels reach grid parity, that means they’ll become a smart economic choice for nearly anyone, not just people in areas with high rebate levels. By then, most consumers will be aware of different options that exist, from power purchase agreements, to solar panel leasing, to bargain-basement buys like the $2,000 solar system that Sungevity announced today.
Separately, cities and towns seem to be realizing that solar is a good alternative to operating peaker plants, and putting investments into their own large systems or leasing out land for panels. Utilities, also, are interested in municipal solar, because it helps them avoid plowing money into new plants.
Instead of growth in silicon-based panels, what seems to be the wild card for photovoltaics is competition from thin-film manufacturers like Nanosolar, Heliovolt and now IBM. We’ll be on the look out for a study that tells photovoltaic makers how to deal with thin-film panels that are a third the price — and rapidly catching up in efficiency.