Frost: Prospects Healthy for Solar Cell Manufacturing Equipment Market

August 18, 2008 // Published as a news service by IHS

Adverse climatic effects due to the emission of greenhouse gases (GHG), as well as escalating energy costs, have catalyzed the shift to alternate energy sources such as solar, wind, nuclear, ethanol and fuel cells.

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Analysts said these energies have outscored natural energy resources by being cleaner, more economical and easily replenished.

Of all the alternative sources, solar energy remains the most feasible to develop on a remote property and flexible enough to meet changing requirements.

Analysts said there are clear cost advantages to installing solar panels compared to having transmission lines, particularly in areas that are not easily accessible.

Solar cells are easier to manage and maintain than other sources such as wind or nuclear.

Governments have come into the mix by implementing policies such as the Renewable Portfolio Standard (RPS), which mandates electricity retailers draw a fraction of their power from renewable energy sources, such as solar.

Analysts said governments have supplemented these stringent laws with several tax incentives and tax breaks for solar power generation. All these moves encourage investments in solar power plants and solar cell manufacturing equipment.

Equipment vendors are working to improve efficiencies and increase handling capacities, analysts said, yet the shortage of raw materials increases the costs of production.

Polysilicon prices are as high as $200 per kilogram (kg) since silicon, which forms the base substrate for most solar modules, is currently experiencing heavy shortages, analysts said. The dearth of raw materials is preventing many manufacturing plants from operating at 100% capacity, driving up the prices of solar modules and hence, deterring potential investors.

Cyclically, the dwindling end-user demand has compelled manufacturers to slow down production of solar modules and this, in turn, will likely result in the sluggish sales of new equipment, analysts said.

Scientists and solar cell manufacturing equipment companies have been relentlessly striving to develop advanced technologies in thin film substrates that offer higher efficiencies. Analysts said thin film substrates will help bring down the prices to a more acceptable $1.3 per watt by 2012. This technology's lower requirement of silicon and substantial energy savings will likely give a boost to new equipment sales.

The North American new equipment sales reflect the popularity of thin film technology over traditional crystalline silicon. Analysts said with increasing efficiencies and new technologies in the developmental stage, the potential for solar energy appears bullish.

Source: Frost & Sullivan.