|Tenna ski resort, Switzerland|
The tiny Swiss ski town of Tenna has an impressively large claim to fame. Although larger, well-known ski resorts overshadow it, when their aging ski lift needed replacing, Tenna invested in building one of the world's first solar-powered ski lifts. As we pointed out in an early contribution to this blog, another example is provided by India. In July 2009, India unveiled a US$19 billion plan to produce 20 GW of solar power by 2020. Under the plan, the use of solar-powered equipment and applications would be made compulsory in all government buildings, as well as hospitals and hotels. On 18 November 2009, it was reported that India was ready to launch its National Solar Mission under the National Action Plan on Climate Change, with plans to generate 1,000 MW of power by 2013.
These are examples of how and where interest in solar energy grows and its use as a source for power is being realized. In fact over the last 20 years, solar electric energy demand has grown 30%. At the same time data shows that the costs and prices of solar power are declining.
On the cost side, the costs can be broken down into numerous components including physical inputs, labor cost or the business circumstances at the macro and micro levels facing the manufacturing company. Of course, other factors such as quality, brand value and customer location also figure into the bottom line calculations.
Looking only at one key input, crystalline silicon, we can see room for optimism on the solar front. Crystalline silicon is the active material in the most common type of solar panel. In recent years, the growth in silicon production has not kept base with demand for the input. However, indications are that the shortage of silicon is becoming less of a factor. Recent data show production of silicon has increased and the key output (photovoltaic module) prices have declined. Given timing considerations, output prices declining faster than input costs could lead to some downward pressure on margins for producers, but overall, we take recent news as a plus – solar is on the rise!