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Solar Cell Production Jumps 50 Percent in 2007

Solar power on track to be cost-competitive with coal-fired electricity by 2010

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Production of photovoltaics (PV) jumped to 3,800 megawatts worldwide in 2007, up an estimated 50 percent over 2006, according to the Earth Policy Institute in Washington, DC. Growing by an impressive average of 48 percent each year since 2002, PV production has been doubling every two years, making it the world's fastest-growing energy source.

Two Types of Photovoltaic Solar Cells
Photovoltaics, which directly convert sunlight into electricity, include both traditional, polysilicon-based solar cell technologies and new thin-film technologies. Thin-film manufacturing involves depositing extremely thin layers of photosensitive materials on glass, metal, or plastics. While the most common material currently used is amorphous silicon, the newest technologies use non-silicon-based materials such as cadmium telluride.

A key force driving the advancement of thin-film technologies is a polysilicon shortage that began in April 2004. In 2006, for the first time, more than half of polysilicon production went into PVs instead of computer chips. While thin films are not as efficient at converting sunlight to electricity, they currently cost less and their physical flexibility makes them more versatile than traditional solar cells.

China Poised to Become Leading Producer of Solar Cells in 2008
The top five PV-producing countries are Japan, China, Germany, Taiwan, and the United States. Recent growth in China is most astonishing: after almost tripling its PV production in 2006, it is believed to have more than doubled output in 2007. Having eclipsed Germany in 2007 to take the number two spot, China is now on track to become the number one PV producer in 2008. (See additional data from the Earth Policy Institute.)

Strong domestic production is not always a good indicator of domestic installations, however. For example, despite China's impressive production, PV prices are still too high for the average Chinese consumer. But large PV projects are expected to increase domestic installations.

Residential Use of Solar Cells Increasing Worldwide
Japan, the United States, and Spain round out the top four markets with 350, 141, and 70 megawatts installed in 2006, respectively. Thanks to a residential PV incentive program, Japan now has over 250,000 homes with PV systems. But the country is currently experiencing a decrease in the growth rate of PV installations resulting from the phase-out of the incentive program in 2005 and a limited domestic PV supply due to the polysilicon shortage.

In contrast, the growth in installations in the United States increased from 20 percent in 2005 to 31 percent in 2006, primarily driven by California and New Jersey. Initial estimates for the United States as a whole indicate that PV incentives, including a tax credit of up to $2,000 available under the U.S. Energy Policy Act of 2005 to offset PV system costs, helped to achieve an incredible 83 percent growth in installations in 2007.

Public Policies Drive Nonresidential Use of Solar Cells
Spain tripled its PV installations in 2006 to 70 megawatts. A building code that went into force in March 2007 requires all new nonresidential buildings to generate a portion of their electricity with PV. In September 2007, a 20-megawatt PV power plant, currently the largest in the world, came online in the Spanish town of Beneixama and is producing enough electricity to supply 12,000 homes.

Falling Prices are Making Solar Power Competitive with Coal
The average price for a PV module, excluding installation and other system costs, has dropped from almost $100 per watt in 1975 to less than $4 per watt at the end of 2006. With expanding polysilicon supplies, average PV prices are projected to drop to $2 per watt in 2010. For thin-film PV alone, production costs are expected to reach $1 per watt in 2010, at which point solar PV will become competitive with coal-fired electricity.

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