Beware the coming solar bubble, a new research report warns.
A coming glut in solar modules will turn out the lights at some of today's solar players, altering the industry landscape by 2010, says Lux Research.
The study, titled “Solar State of the Market Q1 2008: The End of the Beginning,” says solar industry revenue will continue its brisk advance from $21.2 billion in 2007 to $70.9 billion in 2012. But that advance will mask dislocations within the industry as companies unable to make the transition from crystalline solar modules to newer thin-film technologies see their market evaporate.
The market "is now approaching a tipping point," Lux Research Senior Analyst Ted Sullivan said in a statement. "We project that the supply of solar modules will exceed demand in 2009, leading to falling prices and a shake-out among companies that aren’t prepared to thrive in this new environment."
The research also noted that 46 solar companies have listed their shares in initial public offerings that raised $7.3 billion on major exchanges since 1995. Though three-quarters of those deals have occurred in the last three years, the report found a share drop in 2007 as total funds raised sank 40 percent from the previous year's $2.2 billion.
Lux also reported a spurt of solar mergers and acquisitions, with 97 percent of the value of the $2.48 billion in 41 deals since 1995 coming in the last two years. Pushing the consolidation, the report concludes is the thin-film solar manufacturing arm of semiconductor tools maker Applied Materials.
Michael LoCascio, a senior analyst at Lux, warned that by 2010, crystalline silicon photovoltaic companies will find that polysilicon in greater supply, but reduced demand for their finished product as competing technologies like thin-film photovoltaic and solar thermal take market share.
“While sales volumes, measured in megawatts, will continue to increase, average sales prices will fall," he said in a statement. "The result is that revenues for crystalline silicon PV will drop on a year-over-year basis in 2010 for the first time in memory – which will cool the enthusiasm for venture capital funding and IPO events.”