Get ready for solar’s second coming

The global solar industry is on the cusp of its second wave of “explosive growth,” according to the CEO of leading Chinese PV manufacturer JA Solar – and this time around, as grid parity is achieved around the world, the boom will be led by the market, and not by government subsidies.

Fang Peng – who was introduced to the audience at the East Solar Conference in Melbourne today as a “technology guy,” by Australian Solar Energy Society CEO John Grimes – said that after the industry’s first wave of explosive growth, which began in 2010 and was driven mainly by the introduction of feed-in tariffs and other government policies to encourage PV take-up, things had slowed down as governments wound back FiTs and the industry tried to absorb production overcapacity.

But in a keynote speech to open the two-day conference and expo, Dr Fang – who describes JA Solar as “intrinsically linked to Australia” (the “A” in JA solar stands for Australia, in fact) – said that while the current downturn was causing a lot of concern, it was a normal phase in the development of an emerging industry (and here he gave a nod to the semi-conductor industry) and that now was really a very exciting time in the journey of solar PV.

“Over the last 200 years humans have already consumed 90 per cent of (the world’s) fossil fuel storage,” Dr Fang said. “And PV is the most promising alternative.”

“Grid parity is the next step,” he told the small, but enthusiastic audience. “As grid parity is reached, the market will lead the second wave of explosive growth… We can see that this second wave of explosive growth is coming.”

Dr Fang predicted that electricity generated from solar PV would achieve grid parity in a many parts of the world by 2015, and added that he expects it will do so world-wide sometime within the next 10 years. In China, he pointed out, more than 50 per cent of the PV installed has already reached this goal. (And as AuSES chairman Steve Bloom pointed out as a post-script to Dr Feng’s speech, comparisons of energy price parity ignore the cost of pollution that is generated by fossil fuels. When this is factored in, he said, solar PV is already “streets ahead” on price.)

And Dr Fang said that, as grid parity was reached around the world, the market would lead the lead this “second wave” of exponential growth, as opposed to the first time around, when it was led by investors riding a wave created by government subsidies.

He said that the achievement of grid parity would be sped up by falling “balance of system” (BOS) costs, as the prices of the various other components that make up a PV module, such as the inverters, gradually come down.

Meanwhile, “the industry is still in this second phase of driving productivity,” Dr Fang said, reflected in the fact that each year has seen governments around the world raise their country’s PV targets. China itself has upped its target for installed PV capacity to 21GW by 2015 – up from 5-8GW so far this year, and just 25MW three years ago.

After this “golden decade” of solar growth, however, Dr Fang said there would inevitably be some consolidation, which would probably see the industry revolve around a core of just five major manufacturers – of which he hopes JA Solar will be one. And considering it currently has the lowest debt ratio among its Chinese peers, it could be a fair chance.

Dr Fang said that the company would continue to be financially conservative, and to work hard on eliminating what he described at the “infant mortality rate” of PV technology – the incidence of the modules failing within the first five-or-so years of their installed lives, which he says can cause “significant financial damage.”