Solar panel makers and distributors have to
endure a lot of uncertainty in their business. Government
subsidies for solar installations, raw material shortages and
consumer demand are all unpredictable.
But that's par for the course for an immature
market, according to Gary Gerber, president of Sun Light &
Power Co., Berkeley, Calif., which purchases modules from
various manufacturers and installs the systems for
A shortage of silicon constrained the number
of solar cells and panels that could be manufactured, but the
situation has eased in the past couple of years, he said. Now,
a new supply glitch has surfaced-not from silicon shortages,
but from an unusually high number of modules being sent to
Spain because of uncertainties over whether the country's
feed-in tariff will be extended. The problem should be
short-lived, though, Gerber said.
"We basically had an unlimited supply of
modules. Now they are saying they are limiting it," he said,
adding that his company mostly sources products from Mitsubishi
Electric Corp. and SunPower Corp. "Fortunately, we've been
planning ahead so that hasn't impacted our work."
Prices for solar installations and the cost
to manufacture them aren't strictly dependent on supply and
demand, Gerber said. Part of the reason is that modules aren't
yet being produced at the lowest cost, so prices dropped even
when consumption trends were rising. "We're not to scale yet.
Once we get to scale, the supply and demand curve should take
over again and increasing demand should increase costs, just
like what's happening with oil."
At Sun Light & Power, demand for solar
products has shifted from residential needs to larger-scale
multi-family and commercial projects, Gerber said, attributing
it partly to the 30-percent federal solar energy investment tax
credit for homeowners and businesses that is due to expire at
the end of this year. Businesses in particular have a big
incentive to act soon.
The solar industry is lobbying for a
long-term extension, but the legislation currently in front of
Congress could be held up until 2009. "That means we're
essentially out of work Jan. 1 in terms of commercial work
until a new version is approved," Gerber said.
Meanwhile, if the Democrats win the White
House in November it could spur more aggressive U.S. measures
to limit emissions of carbon dioxide, including cap-and-trade
provisions opposed by President Bush.
"A year from now, I would say we'd probably
have, if not an actual cap-and-trade system, something that's
defined and imminent," he said. "That would give us a huge leg
up on getting to grid parity. Renewable energy will be given a
pass on the carbon costs and accordingly will be more
valuable." Grid parity is the tipping point at which solar
power is cost-competitive with other sources of energy on
Regardless of how U.S. legislation unfolds,
solar panel makers are optimistic. After all, nearly 150
megawatts of solar capacity came online in the United States
last year, according to the Solar Energy Industries
Association, Washington, up 45 percent from 2006 levels to 750
megawatts-enough to power about 550,000 homes.
"We expect this trend to continue," said Rory
Macpherson, manager of investor relations for Wuxi, China-based
Suntech Power Holdings Co. Ltd., which designs, develops,
manufactures and markets various photovoltaic cells and modules
The company this year plans to produce 530
megawatts of solar panels, using 4,300 tonnes of silicon.
Suntech expects the dearth of silicon in the market to be
resolved within the next two years as expansions and new
production facilities come on-stream.
If the market is headed to oversupply at that
point, as many suggest, there is an upside, Macpherson said.
"The cost of silicon would then likely drop rapidly, which in
turn would reduce the cost of solar systems. This would
accelerate solar's path to grid parity and would stimulate
significant demand growth and absorb any excess silicon