Solar's Rosy Assessment

Research group sees good news in mass production, global competition.
May 22, 2007
By Andrea Quong

Solar power is poised to become a large-scale, affordable energy source within three to five years, the president of the Worldwatch Institute said Tuesday.

Chris Flavin, who heads the Washington, D.C.-based environmental research organization, based his comments on a forecast suggesting that surging production of photovoltaic cells—the building blocks of solar panels that turn sunlight into electricity—will drive prices of those cells down by 40 percent over the next three years.

The forecast, by the Prometheus Institute, a Cambridge, Massachusetts-based think-tank, suggests that the solar industry is poised to overcome a major impediment to bring sun power to the masses.

"You're going to see this emerge for the first time as an economical and large-scale energy source," said Mr. Flavin. "The dramatic growth that's going on now and the technological evolution is going to break down the costs in the next three to five years."

High production costs have meant that sun-generated electricity is much more expensive to rate-payers than conventional electricity. While subsidies have brought that down to $6 per peak watt, prices need to come down to $3 per peak watt to be competitive, said Ron Pernick, co-founder of Clean Edge, a research and consulting firm.

But economies of scale are expected to lower the cost of producing photovoltaic cells and gradually reduce the price of solar-generated electricity.

Chinese and Taiwanese manufacturers accounted for nearly half of the global increase in solar cell production, which reached 2,521 megawatts in 2006. China and Taiwan produced 547 megawatts last year, compared to only 26 megawatts just three years earlier, according to data from Worldwatch Institute and Prometheus Institute.

China, which exports most of its solar cells to Germany and Spain, displaced the U.S. as the world's third largest manufacturer behind Japan and Germany. Japan, the traditional leader thanks to the likes of Sanyo and Sharp, still controlled the largest share of the market at 36 percent last year, but its production grew only 11 percent.

"The Chinese are, in effect, nipping at our heels," said Mr. Flavin. "This time, they're getting in on the ground floor."

Chinese manufacturers like Suntech Power, which climbed from the world's eighth largest solar cell producer in 2005 to the fourth largest in 2006, rely on conventional, crystalline silicon-based technology. But that could easily change with Chinese companies, many of them startups that went public on U.S. markets, adopting new technologies, Mr. Flavin said.

U.S. market share of solar cell manufacturing slipped to 8 percent in 2006, according to Mr. Flavin. But the U.S. continues to develop next generation technologies for making cells with less or no silicon, which is currently in short supply. In the U.S., production actually rose more than 30 percent to 202 megawatts, largely due to the manufacture of thin-film cells that make do with less silicon by Phoenix-based First Solar, according to the report.