There is a coming shortage of panels for solar systems and if there are no measures to avert this looming shortfall, the solar industry might take a dive. This situation reverses a two-year slump triggered by a glut in the global supply of solar panels.
Solar Systems More Affordable Than Ever
This oversupply of PVs pushed prices down the floor. It made solar systems more affordable and consequently has driven up the demand. But this situation also pulled down many manufacturers into bankruptcy and made the survivors fearful of making additional investments.
But now that the price per watt of solar power is going down and the demand for solar systems is climbing up, the inevitable result will be an acute shortage of panels. For instance, in the past 9 years, the demand for solar systems has multiplied 53 times. Something has got to be done with the supply of photovoltaic cells.
But this is good for the environment because for every solar panel that is installed, the need for fossil fuel-based electricity goes down. That means the environment will at last get its reprieve.
However, there is a limit to the speed by which the solar industry can grow. Apparently, the world’s solar panel manufacturers are now nearing this limit, albeit temporarily. No matter what, production of photovoltaic cells needs to be speeded up. This will prevent the projected lack of supply which is driven by the reduction in price per watt of solar panels.
Demand for solar systems is expected to increase by 29% this year therefore; consumers should not be surprised that manufacturers will experience difficulty in keeping up.
Elon Musk, CEO of Solar City, anticipates the problems of insufficient capacity and stated that manufacturers of solar panels need to build many solar gigafactories.
It was in 2006 when the market experienced a shortage of PV supply. In that year, all the manufacturers can do was to install a total of 1.5 gigawatts. This year, the industry is looking to install as much as 52 gigawatts and an additional 61 gigawatts by 2015. It appears that this is the crunch number for solar panel manufacturers.
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The biggest beneficiary of this shortage of panels is the largest PV manufacturers, including Yingli Green Energy of China and Trina Solar. If these suppliers will continue to favour their largest customers, a shortage may develop outside the markets in North America and Asia.
Smaller rooftop systems such as those seen in households and small factories, will take second priority over utility-scale solar farms such as those installed in large manufacturing facilities and similar establishments.
“The cell and module glut has certainly dried up,” said Stefan de Haan, an IHS Inc. solar analyst. “There is no massive overcapacity anymore,” she added.
In total, the solar industry has a capacity to produce 70 gigawatts of solar systems. However, considering that some of the manufacturing machineries are already obsolete, de Haan’s conservative estimate is only 59 gigawatts. Even then, that should keep the price per watt of solar panels steady for a reasonable length of time.