Applied Materials' Survey Shows Solar Power Is Taking Off
NEW YORK (TheStreet) -- Applied Materials(AMAT) earlier this month was named the top solar photovoltaic (PV) equipment supplier for the fourth consecutive year by market research firm VLSIresearch. Additionally, with revenues of $1.7 billion in 2011, the company crossed the $1 billion mark in sales for the third year in a row.
However, while Applied Materials booked a 16% sequential increase in second-quarter revenues, its energy and environmental solutions division registered a 62% sequential decline on account of excess manufacturing capacity in the solar industry.
While we believe the current year will be tough for solar PV demand, with the global market declining to almost half its current size in 2012, we remain optimistic on the long-term prospects of this segment. With growing awareness about the benefits of renewable energy combined with declining costs, there is bound to be an increase in demand for solar power use.
If the recent findings of Applied Materials' "international solar energy survey" are to be believed, we could see stronger-than-expected demand for solar power. Thus, after a substantial drop this year, we estimate the solar PV equipment market will once again cross the $10 billion mark before the end of our forecast period.
Increased adoption and cost-competitiveness of solar power
Applied Materials' fourth annual solar energy survey was conducted in four countries that have the maximum potential for growth in use of renewable energy: China, India, Japan and the U.S.
Primarily, there are two factors that the solar industry is concerned about:
- Grid Parity or solar energy power that is cost-competitive with traditional energy prices; and
- Adoption rate of solar power use.
The outcome of the survey was favorable for both these factors. Over half the respondents believe that solar energy is cheaper than traditional energy sources such as coal, etc. In reality, over the past year, the PV module prices have fallen to below $1/watt, implying that in many countries solar power has become cost competitive with retail energy prices.