World Sales of Solar Cells Jump 32 Percent

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Viviana Jiménez/Earth Policy Institute

World production of solar cells—which convert sunlight directly into electricity—soared to 742 megawatts (MW) in 2003, a jump of 32 percent in just one year. With solar cell production growing by 27 percent annually over the past five years, cumulative world production now stands at 3,145 MW, enough to meet the electricity needs of more than a million homes. This extraordinary growth is driven to some degree by improvements in materials and technology, but primarily by market introduction programs and government incentives.

The top five manufacturers of solar photovoltaic (PV) cells—Sharp, Kyocera, Shell Solar, BP Solar, and RWE Schott Solar—account for 60 percent of the market share. In 2000, the Japanese company Sharp eclipsed Kyocera (also a Japanese producer) and BP Solar to take the top position among global manufacturers. Since then, Sharp has sustained an impressive annual growth rate of 63 percent, more than twice the global rate. As a result, the company’s share of the world market has climbed to 27 percent.

Japanese PV production—which accounts for 49 percent of the world total—has benefited from a variety of government incentive programs. The 70,000 Roofs Program established in 1994 initially covered 50 percent of PV installation costs. As the cost of solar cells fell with increased production, however, the subsidy was reduced to about 10 percent. By 2002, the number of residential systems installed in Japan had reached 144,000.

Other useful government incentives include a budget allocation of 20.5 billion yen ($186 million) in 2003—for research and development, demonstration programs, and market incentives—and net-metering (feeding excess energy back into the power grid). Within nine years, from 1994 to 2003, these programs helped Japan position itself as the world leader in both production and installation of solar cells.

European production has also boomed. With a growth of 41 percent in 2003, PV production in Europe reached 190 MW. Despite the lack of a unified EU approach toward renewable energy, individual member states’ policies have enhanced Europe’s position in the world market.

Germany, the second largest market for photovoltaics, positioned itself with the 100,000 Roofs Program, launched in late 1998, which provided 10-year low-interest loans for PV installation (it ended early, in 2003, when all targets were met). Germany now leads the way with an Electricity Feed-in Law that started in 1999, which permits most customer applications to receive 45.7 euro cents per kilowatt-hour (kWh) (56¢ per kWh) for solar-generated electricity sold back to the grid. B y the end of 2003, German installed capacity was 400 MW, w ell beyond the initial goal of 300 MW. The rising number of market implementation programs, as well as various regional incentive programs, provides a bright outlook for the solar industry both in Germany and in Europe as a whole.

In contrast, PV production in the United States decreased by 14 percent in 2003, dropping to 104 MW. This was due to lowered production by BP Solar, the repurchasing of solar cells by Shell Solar, and the bankruptcy of Astropower—the second largest producer of solar cells in the United States. Furthermore, the Million Solar Roof Initiative—a national program designed to support states and local communities as they develop solar energy technologies—that was launched in 1997 by President Clinton lacks a dedicated budget, which has stymied progress. As a result, the 89 regional partnerships in this initiative reported that by the end of 2003 there were only 229,000 residential solar roofs throughout the country.

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