The Lux Research report "Market size update 2013: Return to equilibrium" states that market forces will enable a turnabout in the photovoltaic sector to see a "healthy 10.5% compound annual growth rate (CAGR)". Lux Research sees this situation as a "rising from the ashes" for the sector that has been in the doldrums since 2011.
The analysts at Lux Research used a detailed levelized cost of energy (LCOE) analysis in 156 separate geographies to determine the viability and competitiveness of solar in each market.
U.S., China, Japan and India will take over where Germany and Italy have left off, driving global demand from 31 GW in 2012 to 62 GW in 2018. The U.S. is predicted to become the world's second largest market with an 18% CAGR to reach 10.8 GW of installations in 2018. China will lead the pack with an over 15% annual growth to reach 12.4 GW in 2018. The consolidation is already reducing global capacity and low prices will thus weed out uncompetitive manufacturers. With demand rising and warehouses emptying, the industry is likely to return to the state of equilibrium, within 12% of each other in 2015, says Lux Research.
Utility-scale installations are expected to grow the fastest to hit 19.9 GW in 2018 as developing markets start taking note of photovoltaics. This segment is the smallest in 2012 at 8.6 GW according to Lux Research. Commercial applications will be the leading segment globally with U.S. and Japanese markets going heavy on large rooftop installations.
Intellectual property is also up for grabs at record low prices, says Lux Research, enabling struggling start-ups opportunities to acquire them. The Hanergy case is given as an example. Hanergy acquired Miasolé for a mere $30 million despite Miasolé having received $500 million in investment.
"Manufacturers' nightmare is turning into a long-term boon for the industry. Record low prices pushed gross margins to near zero or below, but theyve made solar installations competitive in more markets," said Ed Cahill, Lux Research Associate and the lead author of the report. He added, "Supply and demand will come back into balance in 2015, easing price pressure, returning manufacturers to profitability and restoring the industry to equilibrium".
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