It hasn’t happened yet, but it’s a distinct possibility: in a recent report, analysts have predicted that China’s solar market will experience a glut in late 2009. In light of the sky-high prices of imported polysilicon, Chinese manufacturers such as LDK Solar and Suntech (Suntech is China’s largest solar cell producer, and the world’s third-largest) are gearing up for polysilicon production in order to lower costs both for themselves and presumably for consumers as well.
Thomas Weisel Partners, the firm issuing the aforementioned report, predicts an oversupply situation resulting from the increased availability of polysilicon from Asian producers, the “fast pace of ingot to module capacity” and the shakiness of capital markets in solar causing nascent polysilicon producers to sign contracts for “larger amounts than will likely be delivered.” The first two reasons are not necessarily bad news to consumers, considering how subsidies for solar across the globe are either nonexistent or diminishing in number, but combined with the third, spell trouble for solar manufacturers.
The Thomas Weisel Partners report is in tune with a doomsday statement from Kyocera, the world’s fourth-largest solar cell manufacturer: Tatsumi Maeda, the managing executive officer of the company’s solar operations, says he expects the bubble surrounding the solar power sector to burst, resulting in 80 percent of solar cell manufacturers to “fail” and prices for solar panels to plummet. On a more positive note, he also hopes to achieve grid parity in or six years. While the consumer is the main beneficiary of such economic events, if they come to pass, (cheaper, more efficient solar cells? Grid parity? Yes please!) if producers are hurt enough, the ramifications for consumers could be unpleasant as well. Although I’m loath to predict the formation of a “solar cartel” or anything equally ludicrous, I think that heavily slashed prices of solar—and decreased competition among manufacturers—can help consumers only up to a certain point.
Still, let’s hope that grid parity isn’t too far away, for China and for other countries going solar, like the United States.
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