0vercapacity:
"The rapid success of Chinese solar companies such as Suntech has spawned lots of imitators. And that's why the market is now plagued by overcapacity. A new report from research company iSuppli says 11.1 gigawatts of panels will be produced in 2009, up 62% from 7.7 gigawatts in 2008. However, iSuppli says just 4.2 gigawatts are expected to be installed in 2009, up from 3.8 gigawatts in 2008. "
Reaching the wholy grail of grid parity:
"What is grid parity? It means getting the cost of producing solar energy down to the point where there is no difference between it and competing fossil fuels like natural gas or coal. For Suntech that means about 14 cents per kilowatt-hour. Currently, Suntech's cost is about 35 cents, yet Shi says that by 2012 his production line will reach his target.
How, exactly? For one thing, the scale that the solar industry has reached gives it new pricing power over suppliers. Explains Shi: "We were a parasitic industry relative to the semiconductor industry, which was the main user of silicon." Now that's no longer true: The solar industry uses more silicon than the chipmakers. Also, the world economic slump has driven silicon prices down sharply.
But far more important, analysts say, is increasing conversion efficiency - the amount of electricity derived from the silicon used. The rule of thumb is that every 1% increase in efficiency results in a 6% cost reduction. And in the past year, Suntech has cut costs by about 20%. In time, he says confidently, "solar will be cheaper than coal or gas."
Not all industry analysts are as sanguine. "Obviously the efficiency gains get harder the more efficient you get," says Pavel Molchanov, an alternative-energy analyst at Raymond James & Co. "Shi has made impressive gains so far, but grid parity by 2012 is pretty ambitious - though plausible.""
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