US solar giant SunPower says the international solar market is looking positive, as demand booms in several key markets and the supply situation also gets under control.
SunPower CEO Tom Werner told RenewEconomy in an interview last week that the long term prospects of the solar industry were also strong, given it only had a fraction of the multi-trillion dollar global electricity industry at the moment.
“Solar will happen, because people want it and because the economics work now,” Werner said. “People always wanted solar in last decade, but you used to be able to scoff at it and say it cost too much. You can’t any more.”
“The math is simple. If we get a 1 per cent share (of the global energy industry), our company would be 10 times bigger than it is today. This is a massive opportunity.” He noted that oil giant Royal Dutch Shell had recently predicted that solar would have 40 per cent of the global energy market by 2100.
As for the current market situation, Werner noted the significant change in fortunes in recent months because the supply/demand equation was being rebalanced.
He said there was no doubt that the “rationalisation” among manufacturers was underway. “There are very few companies that can get infinite cheap money and they cannot sell modules at a loss indefinitely.”
On the demand side, the surge in demand in China and Japan meant that those two countries now accounted for 40 per cent of global demand. And the market in many other countries had also improved.
This had been reflected in the share price of SunPower and the sector in general. SunPower’s stock is up nearly three fold since the start of the year and the company is now valued at more than $US4 billion.
“We have got a very good environment for the industry,” Werner said. “Leading edge companies are getting costs down, they are less sensitive to incentives, and they are transitioning to becoming an energy company, or a energy solutions company, rather than just manufacturers.”
SunPower, as we reported last week, is looking to use Australia as a testing ground for the “energy solutions” model, rolling out the concept through its 42 per cent owned local green energy retailer Diamond Energy.
Werner noted that the solar industry had graduated from selling modules, to systems, to energy companies and now energy solutions. “We (the industry) have had three transitions and the last two are the big ones,” he said.
He said it was now clear that solar was increasingly competitive in price. SunPower puts the cost of large-scale ground mounted solar at 6c-9c/kWh, with incentives such as the investment tax credit.
“The slope of line (on costs) suggests you don’t need incentives indefinitely,” Werner said. He said smaller rooftop solar was about twice that price, but were competing with retail prices behind the metre.
‘To be a manufacturer has been a tough place to be. When costs come down, you control your own destiny and markets see that. That’s why American utilities are taking solar extremely seriously. They getting numbers back, and they are saying this is real.”
