Bold Solar Growth Projections

The solar industry has been growing at an astounding pace this decade, but can the growth continue or even accelerate further? Since 2000, the solar industry has been growing at over a 30% annual rate, and reached an estimated 5.4 GW of annual production in 2008.


Historical growth of the PV industry (measured in MW of annual production), and one potential growth path through 2015. Note the logarithmic scale of the y-axis.

However, a lot of pessimism has affected the solar industry recently, with concerns about dropping fossil fuel prices and disappearing financing. However, Michael Rogol expects the solar industry will reach 52 GW of production capacity by 2012, corresponding to an annual growth rate of 75% over the next 4 years.

What is his reasoning? He made a compelling case in a recent speech at MIT, which focused particularly on the demand side. His argument is that there are two major categories of demand: big, utility-scale developments, and small, rooftop-sized ones. Now, while utility-scale developments have slowed down due to financing issues, and consumed most of the headlines, he argues that a veritable armada of small-scale installers are ready to pick up the slack. Furthermore, a small drop in prices, combined with increasingly generous subsidies in the US, Italy, and Australia, to name a few, are inducing the creation of an unbelievable number of small businesses, dedicated to rooftop installations. Furthermore, he argues that the financial crisis, memories of recent oil price surges, and environmental concerns have increased small investors' interest in acquiring hard assets such as solar installations.

On the supply side, he feels that the profit margins for the leading players in the solar industry have been so strong that they've driven very rapid growth via reinvestment of extra cash in the firms' core business. First Solar is the perfect example: since their IPO in 2006, they doubled capacity in 2007, and did it again last year.

How will we know whether Rogol's right? It's pretty simple, actually. If large factories producing cost-competitive solar cells keep going full steam ahead, without massive inventory build-ups, then it's pretty likely that the solar slowdown has been overestimated.