Gernot J. Oswald
President and CEO
Siemens Solar

Presented at Second World Conference on Photovoltaic Energy Conversion
Vienna, Austria July 7, 1998

Summary
The Art of Looking into the Future

There is little risk in predicting, that the PV-industry will "take off" in the next century. How smooth and pleasant the flight will be depends a lot on our ability to predict the weather conditions, the features of our aircraft and last but not least the quality of the people piloting the plane.

If we look back a little we will find how difficult it is to predict the future of our industry: According to the forecasts of highly respected people made in the 70's the 1995 world-wide installed PV-capacity should have exceeded one hundred GWp. Hopefully we will have installed one GWp by the end of this century. They were off by a factor of more than one hundred.

Another moving target, which is critical to the competitiveness of PV, is the availability and the price of crude oil. According to professional predictions in the 80's the price of a barrel of oil should already have crossed the 100 US $ barrier. We all know, that today OPEC is trying very hard to bring this price back up to at least 20 US $ per barrel. (Fig. 1)

These are only two of many wrong assumptions and forecasts, which have contributed to more than the 3 billion US $ of losses our young industry has accumulated during the last 25 years. Numerous entries, exits and some re-entries of players during this period highlight these problems.

The Status of the Industry
Is our industry now ready to "take off" into the "Solar Century"?

The criteria, which distinguish an industry from a science are the maturity of its—

Our products are of high quality and are reliable. They are mature enough to be considered industrial.

The maturity of the PV-market is highly questionable, as two thirds of it are still dependent on some kind of subsidies.

Many of the PV-players have been around long enough to become mature, but are not. There is good reason for all of us to accelerate this process. Mistakes are becoming more and more expensive.

In summary, I would describe the status of Photovoltaics as being—

Looking Ahead
Planning to "take off" into the "Solar Century," we need to forecast as accurately as possible the development of—

The Markets
After experiencing nearly 40 % growth and having shipped more than 110 MWp in 1997 it may be difficult for some people not to become too euphoric again. In 1998, with a recession in Japan and the financial crisis in Asia, we have to learn that our tiny, young industry is exposed to abrupt changes. It has changed from a seller to a buyers market overnight. A year ago time for delivery of modules exceeded six months while today almost everything is available from stock at decreasing prices without regard for increasing costs.

With all the good reasons the human society has to promote PV, our long-term model uses an annual growth rate of between optimistic 15 and fantastic 25 percent on a megawatt basis. These rates will depend heavily on the development of the grid-connected portion of the market in industrial countries. This market will continue to be directly coupled to subsidies until the price of crude oil and other conventional source of energy substantially increase. (Fig. 2)

We, at Siemens Solar, are planning with 15% and dreaming of 25%. A growth rate of between 15 and 25 % in annual shipments would make PV a one percent contributor to the world electricity generation between the year 2025 and 2040. This means, that little quantitative competition for fossil or nuclear power stations will come from PV for the next decades.

The qualitative contribution of this one percent of electricity, however, will be dramatic. One percent of total electricity generation would be equivalent to about 300 TWh in the year 2025 respectively about 350 TWh in 2040. Less than one third of this is enough to provide those famous two billion people, who live far from the grid, with electricity for their basic needs of light, communication, water pumping and medical care. It will fundamentally change their life, keeping them away from the slums of mega-cities and may even help to control their birth rate.

We assume that both the off-grid industrial and the off-grid consumer markets – today the only truly natural markets – will continue to grow at a healthy rate of about 15 % per year.

Before PV can contribute 1 % to the electricity generation of the world, the challenges are enormous. We will have accumulated PV-installations of more than 300 GWp and will then be shipping about 50 GWp/year. This is almost 500 times more than we produce now. And it will require accumulated investments up to 100 billion US $.

The Technology
I do not believe that we already know, which technology will eventually produce 50 GWp per year. But the 50 GWp-dream should not keep us from solving the problem of increasing our current production level of 100 MWp to 1 GWp per year within the next 10 to 15 years.

1 GWp in crystalline technology would require 15.000 tons of silicon. This is roughly the total current production of silicon for the microelectronics industry. The scrap portion of their production, which is available and usable for the PV-industry will grow much slower than our requirements. We believe that we will reduce the silicon consumption from 15 t/MWp to 10 t/MWp during this timeframe. However, despite all efforts in this area, we do not expect enough "cheap" solar grade silicon to be available in the next ten years.

This means that—

For decades it has been expected that thin-film would become the dominant PV-technology. World records are announced on a regular basis. Volume production has become a moving target, similar to the 100 US $ price per barrel of oil. Our industry must shift 50 % or more of the production of the year 2010 to thin-film in order to sustain a long term annual market growth of 15 % or more. Our own recent progress with CIS helps us to believe that this will happen.

The Challenges of the Near Future
The relatively modest, but realistic target of 1 GWp shipments around the year 2010 will not be achieved easily. Our industry will have to invest more than 2 Bill US $ in module manufacturing and 5 Bill US $ in total. Subsidies, (excluding R&D) of 6 Bill US $ are necessary between now and then, assuming that 50 % of the total market needs an average of 30 % subsidies to stimulate the expected development.

We believe that this is both desirable and possible. It will, however, require education of the decision-makers in governments, banks and industrial companies and training of millions of potential customers. Many of these customers do not even know, what electricity is or what it can mean to them. It also requires, and this might be the most difficult part, to develop the micro-banking and micro-service infrastructure to reach these people in their remote homes, before they move to overcrowded mega-cities.

One of the most promising examples of how to best address this challenge is demonstrated by the Grameen Bank in Bangladesh. Their approach should be exported to as many developing countries as possible.