The global solar energy industry is currently going through turbulent times due to overcapacity and the credit crunch.
But economic stimulus packages in China and elsewhere in Asia will help lead the industry out of the trough and they will create new waves of demand for solar energy far remove from traditional markets in US and Europe.
Frost & Sullivan analyst Suchitra Sriram, who covers energy systems in the Asiapac region, believes these economic packages have strong potential to turn around the solar power industry in the short to medium term. He says:
In China, the $440bn stimulus package has put solar power as one of the key green energy resources to be developed in the near future. A number of solar power projects are already under construction throughout the country. The upcoming solar power installations have the potential to surpass the original 2020 target of 1.8GW by up to 10 times, reaching between 10GW and 20GW over the next 10 years.
Compared with China's projected wind power capacity of 100GW for 2020 — see this story — its ambitions in solar energy are relatively modest. But this this represent a big bet on solar power and it is likely to have big repercussions on the global solar power industry.
That is because until now, most solar panel manufacturing facilities have been set up to satiate the thirst of major markets in Europe and the US.
By increasing the proportion of domestic market sales in Asia, many multinational solar power companies with manufacturing plants in the region can effectively deal with the production overcapacity problem faced in the US and Europe.
The combination of strong domestic market demand, low-cost manufacturing plants and predicted industry consolidation creates a “plethora of growth opportunities” for solar power companies in Asia, Frost & Sullivan argues.