By Gemma Childe on 15th May 2012
The solar industry will continue to grow and create renewable energy jobs despite cuts in government subsidies, according to research by McKinsey.
The industry's recent troubles are merely a blip in a long-term trend that in a few years is likely to see "stable and expansive growth", the report says.
McKinsey's study, titled Solar Power: Darkest Before Dawn, accepts that solar has been suffering from "growing pains", but says fears that the industry has “lapsed into a classic cycle of boom and bust after a decade of unprecedented growth" are wide of the mark
It claims the solar industry is simply undergoing a period of levelling out after years of government subsidies and the falling price of photovoltaic (PV) modules led to a rush of suppliers to the market.
“Demand today isn’t keeping up with supply, and governments continue to scale back support as they cope with the aftermath of the economic crisis,” it adds.
McKinsey says that solar is entering “a period of maturation that, in just a few years, will probably lead to more stable and expansive growth for companies that can manage costs and innovate to tap rising demand from multiple customer segments.”
The research organisation estimates that the cost of a typical PV system will fall by 40 per cent by 2015 and a further 30 per cent by 2020 as manufacturing capacity doubles.
This will enable solar companies that are able to innovate and cut costs to prosper with minimal, or even no, subsidies, the study suggests.
“Growth over the next 20 years will stem largely from demand based on viable stand-alone economics in five customer segments: off-grid, residential and commercial in areas with good and moderate sun conditions, isolated grids, peak capacity in growth markets, and new large-scale power plants," it adds.