The latest report from NPD Solarbuzz — a market research firm based out of Santa Clara, California — projects that global revenues for the solar photovoltaic (PV) module industry will drop from $25.5 billion last year to $20.5 billion for this year. That 20 percent plunge, according to Solarbuzz, is a simple matter of overproduction.
The supply of potential solar PV capacity shot all the way up to 45 gigawatts by 2012, while end-market demand only reached 29 gigawatts. The cause was a precipitous drop of 50 percent in the average selling price of the modules, which is great for anyone who wants to buy, install, or use solar energy, but not so great for firms that supply it.
So now there’s an ongoing drop in revenues, and a lot of backtracking amongst firms to bring supply back into line with demand, according to NPD Solarbuzz Senior Analyst Michael Barker:
Share values of several publicly listed PV companies have been falling close to delisting levels, operating losses have been reported in the hundreds of millions of dollars per quarter, and many manufacturers are continuing to file for insolvency.
As CleanTechnica noted, the recent bankruptcy of then Chinese solar manufacturer Suntech Power is only the most high-profile example of the problem. (Though it looks like Suntech’s troubles also had a lot to do with bad financial management outside of any question of market fundamentals.) The good news is that the reckoning should be short. NPD Solarbuzz also projects revenues will start climbing again in 2014, and should clear 2012′s level by 2016.
Solar PV Module Supplier Revenues Forecast To 2017
There’s an argument to be made that the short-term culprit here is the contest between the United States and China, to see who can subsidize their respective solar industries the most (Hint: China is winning). On the other hand, finding the most economically efficient way to deliver energy — or finding the best “comparative advantage” roles for the U.S. and China in the solar market — is only the second most important goal of promoting renewables.
The most important goal is preventing worldwide ecological and civilizational catastrophe. And the entire way we currently conceptualize and measure economic activity doesn’t grapple with the damage we’re doing on that account.
Admittedly, tax and grant subsidies for renewable energy technology are an imperfect response to that problem. Building prices into the energy we get from fossil fuels that actually account for the ecological and social risks of carbon emissions would be far more elegant — and might help avoid some of these annoying overshoots and busts in the renewable energy market. But getting a price on carbon is proving to be a difficult political lift.
And in the meantime, simply sitting on our hands isn’t an option.
This article was originally published on Climate Progress. Reproduced with permission