Global production of solar photovoltaic (PV) cells, which turn sunlight directly into electricity, has risen sixfold since 2000 and grew 41 percent in 2006 alone. Although grid-connected solar capacity still provides less than 1 percent of the world’s electricity, it increased nearly 50 percent in 2006, to 5,000 megawatts, propelled by booming markets in Germany and Japan.
This dramatic growth has actually been constrained by a shortage of manufacturing capacity for purified polysilicon, but that situation will soon be reversed as more than a dozen companies in Europe, China, Japan, and the United States bring on unprecedented new levels of production capacity. In 2006, for the first time, more than half the world’s polysilicon was used to produce solar PV cells. Combined with technology advances, the increase in polysilicon supply is projected to bring costs down by more than 40 percent in the next three years.
The biggest surprise in 2006 was the dramatic growth in PV production in China. Last year, China passed the United States, which first developed modern solar cell technology at Bell Labs in New Jersey in the 1950s, to become the world’s third largest producer of the cells behind Germany and Japan.
China’s leading PV manufacturer, Suntech Power, climbed from the world’s eighth largest producer in 2005 to fourth in 2006. Experts believe that China, with its growing need for energy, large work force, and strong industrial base, could drive dramatic reductions in PV prices in the next few years, helping to make solar competitive with conventional power even without subsidies.
“To say that Chinese PV producers plan to expand production rapidly in the year ahead would be an understatement,” says Travis Bradford, president of the Prometheus Institute. “They have raised billions from international IPOs to build capacity and increase scale with the goal of driving down costs.”