"The world has quietly entered a new era, one where there is no national security without global security. We need to recognize this and to restructure and refocus our efforts to respond to this new reality." –Lester R. Brown, Plan B 4.0: Mobilizing to Save Civilization.
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Production of photovoltaics (PV) jumped to 3,800 megawatts worldwide in 2007, up an estimated 50 percent over 2006. At the end of the year, according to preliminary data, cumulative global production stood at 12,400 megawatts, enough to power 2.4 million U.S. homes. Growing by an impressive average of 48 percent each year since 2002, PV production has been doubling every two years, making it the world’s fastest-growing energy source.
Photovoltaics, which directly convert sunlight into electricity, include both traditional, polysilicon-based solar cell technologies and new thin-film technologies. Thin-film manufacturing involves depositing extremely thin layers of photosensitive materials on glass, metal, or plastics. While the most common material currently used is amorphous silicon, the newest technologies use non-silicon-based materials such as cadmium telluride.
A key force driving the advancement of thin-film technologies is a polysilicon shortage that began in April 2004. In 2006, for the first time, more than half of polysilicon production went into PVs instead of computer chips. While thin films are not as efficient at converting sunlight to electricity, they currently cost less and their physical flexibility makes them more versatile than traditional solar cells. Led by the United States, thin film grew from 4 percent of the market in 2003 to 7 percent in 2006. Polysilicon supply is expected to match demand by 2010, but not before thin film grabs 20 percent of the market.
The top five PV-producing countries are Japan, China, Germany, Taiwan, and the United States. (See data.) Recent growth in China is most astonishing: after almost tripling its PV production in 2006, it is believed to have more than doubled output in 2007. With more than 400 PV companies, China’s market share has exploded from 1 percent in 2003 to over 18 percent today. Having eclipsed Germany in 2007 to take the number two spot, China is now on track to become the number one PV producer in 2008. The United States, which gave the world the solar cell, has dropped from third to fifth place as a solar cell manufacturer since 2005, overtaken by China in 2006 and Taiwan in 2007.
Strong domestic production is not always a good indicator of domestic installations, however. For example, despite China’s impressive production, PV prices are still too high for the average Chinese consumer. China only installed 25 megawatts of PV in 2006, exporting more than 90 percent of its PV production, mainly to Germany and Spain. But large PV projects are expected to increase domestic installations. China is planning a 100-megawatt solar PV farm in Dunhuang City in the northwestern province of Gansu, which would have five times the capacity of the largest PV power plant in the world today.
Despite its skies being cloudy two thirds of the time, Germany has been the leading market for PV installations since it overtook Japan in 2004. In 2006, Germany, adding 1,050 megawatts, became the first country to install more than one gigawatt in a single year. Driven by a feed-in tariff that guarantees the price a utility must pay homeowners or private firms for PV-generated electricity, annual installations in Germany alone have exceeded those in all other countries combined since 2004. There are now more than 300,000 buildings with PV systems in Germany, over triple the initial goal of the 100,000 Roofs Program launched in 1998. Growth is set to remain strong, as a feed-in tariff of 49¢ per kilowatt-hour will remain in place through 2009.
Japan, the United States, and Spain round out the top four markets with 350, 141, and 70 megawatts installed in 2006, respectively. (See data.) Thanks to a residential PV incentive program, Japan now has over 250,000 homes with PV systems. But the country is currently experiencing a decrease in the growth rate of PV installations resulting from the phase-out of the incentive program in 2005 and a limited domestic PV supply due to the polysilicon shortage.
In contrast, the growth in installations in the United States increased from 20 percent in 2005 to 31 percent in 2006, primarily driven by California and New Jersey. The California Solar Initiative was launched in January 2006 as part of the state’s Million Solar Roofs program to provide more than $3 billion in incentives for solar power. The goal is to generate 3,000 megawatts of new solar power statewide by 2017. New Jersey’s Clean Energy Rebate Program, which began in 2001, offers a rebate of up to $3.50 per watt for residential PV systems, contributing to a more than tripling of installations between 2005 and 2006. Other states, such as Maryland, have passed renewable portfolio standards that mandate a certain percent of electricity generation from solar PV. For Maryland, the goal of producing 2 percent of electricity from the sun by 2022 is expected to lead to 1,500 megawatts of PV installations in the state.
Initial estimates for the United States as a whole indicate that PV incentives, including a tax credit of up to $2,000 available under the U.S. Energy Policy Act of 2005 to offset PV system costs, helped to achieve an incredible 83-percent growth in installations in 2007.
Spain tripled its PV installations in 2006 to 70 megawatts. A building code that went into force in March 2007 requires all new nonresidential buildings to generate a portion of their electricity with PV. Spain also initiated a feed-in tariff in 2004 that guarantees that renewable energy will be bought by utilities at three times the market value for 25 years. In September 2007, a 20-megawatt PV power plant, currently the largest in the world, came online in the Spanish town of Beneixama and is producing enough electricity to supply 12,000 homes. By the end of 2008, cumulative PV installations in Spain are expected to exceed 800 megawatts, twice its original 2010 goal.
Of the world’s PV manufacturers in 2007, Sharp (Japan), Q-Cells (Germany), and Suntech (China) claimed the top three positions. (See data.) But after holding the top spot for more than six years, Sharp, hampered by limited access to polysilicon, is likely to post only a 4-percent growth in production in 2007, well below the 50 percent industry average. However, Sharp’s annual thin-film production capacity is on track to increase from 15 megawatts today to 1,000 megawatts per year in 2010.
Suntech, a relatively new firm started in 2001, was the fourth-largest PV manufacturer in 2006, and eclipsed Kyocera in 2007 to take third place. In the first half of 2007, Suntech produced almost as much PV as it did in all of 2006.
Capitalizing on the polysilicon supply crunch, First Solar in the United States moved into the top 15 global manufacturers in 2006 by producing 60 megawatts of cadmium telluride thin-film PV, triple its production in 2005. In the first half of 2007, First Solar leapt onto the top 10 list, moving up five spots to number eight and continuing its reign as the fastest-growing PV manufacturing company in the world.
The average price for a PV module, excluding installation and other system costs, has dropped from almost $100 per watt in 1975 to less than $4 per watt at the end of 2006. (See data.) With expanding polysilicon supplies, average PV prices are projected to drop to $2 per watt in 2010. For thin-film PV alone, production costs are expected to reach $1 per watt in 2010, at which point solar PV will become competitive with coal-fired electricity. With concerns about rising oil prices and climate change spawning political momentum for renewable energy, solar electricity is poised to take a prominent position in the global energy economy.
Copyright © 2007 Earth Policy Institute