TORONTO — A global oversupply of solar technology foreshadows a cloudy 2010 for manufacturers but a brighter outlook for more widespread adoption of the clean-energy technology by consumers, according to some analysts.
Ontario, which is known as a hub of Canadian solar power along with B.C. and Quebec, is expected to announce a new green energy deal with Samsung Group worth up to $7 billion on Thursday. The plan is said to include the development of an additional 600 megawatts of wind and solar farms and stimulate jobs in the industry.
But the province may run the risk of trying to create a globally competitive solar manufacturing industry even as other countries are trying to unload their own market overcapacity, said Duncan Stewart, co-author of Deloitte Canada’s 2010 technology predictions report.
An oversupply of polysilicon, a material used in solar panels, is leading some analysts to predict a turbulent 2010 for many of the world’s solar companies, including Canada’s Timminco Ltd., (TSX:TIM), Arise Technologies Corp.(TSX:APV), and Day4 Energy Inc. (TSX:DFE).
A dismal performance for the solar industry compared with the broader Clean Tech sector is one of Stewart’s top technology predictions for 2010 and was discussed at a conference in Toronto on Wednesday.
Calls to a number of Canadian solar companies were not returned. A spokeswoman for The Canadian Solar Industries Association said the industry would “wait and see what happens.”
Some analysts began advising investors to drop solar stocks as early as October 2008, citing an already overstocked market in an industry that depends on access to financing, which was becoming harder for companies to secure as the recession set in.
Just before the economic crisis hit in 2008, governments increased subsidies for solar and invested in manufacturing plants. That increased the supply of solar modules to about 12 gigawatts of annual global capacity and drive up demand and prices, Stewart said.
But as the world sunk into recession, solar subsidies began to dry up while production lines continued to roll out panels.
Stewart predicted the 12 gigawatts of annual global polysilicon capacity in 2008 will double by the end of 2010, but demand will only grow by about 6.2 gigawatts, meaning only about 25 per cent of that will be used.
“I have never seen capacity utilization in an industry this low,” he said, adding that prices for both solar equipment and raw materials will likely remain depressed this year.