Solar is so popular right now, we're facing a shortage of panels!

SunTech solar panel maker from china
© SunTech

From glut to shortage for first time since 2006

It's worth repeating again and again: The price per watt of solar power is going through the floor while worldwide installed capacity is going through the roof (up 53x in the past 9 years!). This is great for the environment, because for each solar panel that goes up, demand for electricity from dirty sources goes down, causing a great virtuous cycle of demand destruction. But there are limits to how fast an industry can grow, and we're apparently starting to hit those limits, at least temporarily, and production will need to further increase to keep up.

Demand is expected to go up 29% this year, so it's not surprising that supply has a hard time keeping up. That's exactly why Elon Musk and SolarCity say that we will need many solar gigafactories.

The last time supply was tight, in 2006, the solar industry installed about 1.5 gigawatts that year. Contrast with today: The industry expects to install as much as 52 gigawatts this year and 61 gigawatts in 2015. That's about as much as is actually being produced by viable factories.

Renewable Energy Policy Network/Screen capture

Back in 2011, I wrote something called The Solar Industry is Like a Yo-Yo to explain the boom-bust cycle facing solar panel makers:

"For about as long as it has existed, the solar power industry has been going from boom to bust, and vice versa. It is growing fast, and has been for years, but forget about a smooth upward curve: Up close, the trajectory looks like the Alps."

Renewable Energy Policy Network/Screen capture

Busts might be bad for individual companies, but they aren't necessarily bad for solar power itself, as we've seen in the past few years. A glut of panels meant that prices fell and a lot more solar power was installed than if prices had been high.

Now that demand has grown to match, and maybe now exceed, supply, the opposite will happen. Solar prices will go up, or at least not fall as fast, and more solar panel makers will make money. This will attract competition and new investments in additional capacity until supply once again overtakes demand and prices fall because of the glut...

Wash, rinse, repeat.

© BNEF

Via Bloomberg

Tags: Solar Energy | Solar Power

WHAT'S HOT ON FACEBOOK