Vishal Shah is senior analyst and head of the Clean Tech Equity Research Team of Barclays Capital. Formerly, he was the lead Clean Tech equity analyst at Lehman Brothers, covering US- and China-based solar stocks. Vishal has been an equity analyst in the solar and semiconductor equipment sectors since 2002, for firms such as Lehman Brothers, Needham & Company, and Morgan Stanley. In 2009, his team received top recognition in the Greenwich Associates survey. Before joining Wall Street, Vishal worked at Applied Materials in the semiconductor equipment industry. Vishal earned a B. Tech degree in Chemical Engineering from the Indian Institute of Technology, Bombay and an MBA from INSEAD, France.
1. The PV market seems to grow more each year than analysts can predict. You yourself predicted a 25 percent decline in 2009 and growth of 7 GW in 2010. Both predictions turned out to be too pessimistic. How have you taken this into consideration in your predictions for 2011 and 2012?
The last five years we have forecast too conservatively. In 2011, we gradually forecast growth of 15 to 17 gigawatts. What actually happened in 2010 was that government policies in key markets such as Germany and Italy were very uncertain. As the year progressed, our outlook started to change. We are taking this into consideration for 2011 and 2012. We think out projections are sound. We see more demand and a significant increase of low-cost panels, but it will still be influenced by government policies.
2. What are your expectations for the global PV market in 2011 (size in MW new installed power) and 2012? Will the PV market continue to increase spectacularly in the coming years or will it decrease because of governments ending or reducing feed-in tariffs?
We forecast growth of 21 GW in 2011 and 17 GW in 2012. The reason the growth will decrease in 2012 is that governments are about to end incentives and feed-in tariffs, although our assumption could be somewhat conservative. There are many uncertainties when it comes to government policies. The market is in a transition period from the second to the third phase.
3. Do you believe the cost for solar energy can and will come down substantially during the coming years?
Absolutely. The costs will come down by 40 percent and there is even room for further cost reduction.
4. What is the potential for cost reductions in the supply chain? What can we expect as an average sales price for solar PV modules three years from now?
There is a lot of margin left. For the next three to five years, I think a price of $1.30 to $1.40 per watt is feasible, but subsequently we could reach a price of $1 per watt.
5. Critics are waiting for the time solar electricity will be cheaper (for residential customers) than electricity from the grid. When and where do you see that happening first?
We see grid parity happening at the end of this year or next year. In Europe, we are near to grid-parity already. Firstly, we foresee solar energy replacing electricity generated by natural gas. Soon, in some countries it will be cheaper to draw electricity from the panels on your roof than to use electricity from the grid. In other parts of the world, solar will replace diesel fuel-generated electricity. Diesel is not neither cheap nor environmental friendly.
6. What is your vision on the development of the US PV market? Will the US overtake Germany during the coming three years - and if so, why?
The US market will be one of the fastest growing markets in the world. It will grow even faster than Germany because the incentives in the US will be better. People can get a 30 percent tax rebate on their investments and a state incentive.
7. Do you see any potential for the development of the European solar industry, in light of the incredible solar industry growth we are witnessing in China?
The panels will be manufactured in China. Upstream in the supply chain, European companies will develop in the equipment manufacturing domain, and will develop downstream in the areas of product manufacturing and installation services.
8. Will thin-film technology take over in the near future from the crystalline module technology prevalent today, in terms of cost reduction?
I don’t think so, no. Crystalline companies dominate the market and their prices and costs are still coming down.
9. What do you see as the major trends and drivers for solar energy in the coming years and what will the global solar energy market look like five years from now? Will Germany and Italy remain leading markets or will China and India lead the global developments?
You will see grid parity in different parts of the world, and as a result, growth will increase significantly - i.e. significantly more than we expected. You will see large companies who will make a lot of money. And you will see the US becoming one of the biggest markets, with India and China producing a lot of solar capacity. European countries will not grow as much as these counties.