Is the Solar Industry Really Getting Well?

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In 2013 the global solar panel industry installed about 39,000 megawatts of new modules. At least one industry analysis firm, NPD Solarbuzz, estimates the solar photovoltaic (PV) demand will rise to a range of 49,000 to 50,000 megawatts in 2014 and up to 62,000 megawatts in 2015. In order to reach those numbers, demand from China, Japan and the United States will be the drivers.

Solar PV makers have been reporting quarterly results recently, with China’s JA Solar Holdings Co. Ltd. (NASDAQ: JASO) the latest to do so on Tuesday morning. JA Solar beat estimates for both earnings per ADS and revenues, and the company raised its forecast of total fiscal year shipments from a prior range of 2,900 to 3,100 megawatts to a new range of 3,100 to 3,200 megawatts.

In an interview with PVTech, NPD Solarbuzz Vice-President Finlay Colville said:

[Solar PV] market growth in recent years has been largely due to the popularity of large-scale, or utility-based, solar farms. In contrast to rooftops, 5-10 MW can be added now very quickly by seasoned [engineering, procurement, and construction companies] assuming land access and grid connections are in place. Many sit with active pipelines of several hundred megawatts.

Colville said that top-tier solar PV suppliers Yingli Green Energy Co. Ltd. (NYSE: YGE) and Trina Solar Ltd. (NYSE: TSL) could between them “easily ship 10 GW next year.”

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First Solar Inc. (NASDAQ: FSLR) said earlier this month that it expects to produce 1,800 to 1,900 megawatts in 2014 on net sales of $3.6 billion to $3.9 billion. The company’s results are hard to predict due to timing of revenue recognition and project sales, and third-quarter results were disappointing.

Colville thinks that both First Solar and SunPower Corp. (NASDAQ: SPWR) will increase capital spending next year because both use their own modules for the large projects they develop, and there is simply no avoiding capex if the companies are going to grow.

In any event, current industry capacity of more than 50,000 megawatts will need to increase by nearly 20% if NPD Solarbuzz is right about 2015 demand. The International Energy Agency (IEA) now expects solar to become the biggest source of energy by 2050. To achieve that target, annual solar PV installations need to rise from the 39,000 megawatts installed in 2013 to 124,000 megawatts annually, about double the Solarbuzz estimate for 2015.

It is numbers like these that testify to the continuing strength of the solar industry. We likely will never see the heady days of 2008 again, but the latest solar shakeout is probably behind us and the future looks so bright you gotta wear shades.

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