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The solar power sector is sprinting ahead of our previous estimates. Production growth, price increases and cost reductions are stronger than expected. In 2005, the sector achieved 44% volume, 50% revenue and 149% profit growth. In the next five years, we expect rising residential grid prices, robust policy support and new sales channels will drive six-fold production growth.
Initially, this 40-50% annual expansion of production raised concern that a
»glut« might reduce prices and margins. Further, we worried about negative impacts on demand if interest rates were to rise, hydrocarbon prices fall or pro-solar policies be reversed. However, interviews with 400+ solar power executives and policymakers in 10 geographic markets have fortified our conviction that demand will significantly exceed supply through the end of the decade, that prices are likely to remain high and that margins are likely to continue expanding for at least 3 more years. Overall, we suspect that many managers and analysts are significantly underestimating the sector’s strong prospects for volume, price and earnings for 2006 through 2010.
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In the next five years, we expect rising residential grid prices, robust policy support and new sales channels will drive six-fold production growth.
