The solar power sector continues its rapid ascent. In volume terms, the sector is on a path to grow from 3.9GW of cell/module production in 2007, to more than 7GW in 2008, 14.7GW in 2009 and at least 52GW by 2012. This equates to a 68% CAGR, with significant upside potential for both silicon and thin film production. Despite this very fast growth rate, we con-tinue to see strong demand drivers (low interest rates, rising grid prices, ongoing policy expansion) and expect only 7% compound annual price declines for global weighted average system and module prices. The combination of rising volumes with modest price declines means that solar sector revenue is poised to expand from $27bn in 2007 to $274bn by 2012. With increasing economies of scale and incremental improvements in manufacturing process, cost reductions will continue at a pace that enables solar sector operating margins to remain above 30% through 2012. The result is a sector operating profit pool that will expand rapidly, from $8bn in 2007 to over $86bn by 2012 (61% CAGR). Given the volume, revenue and profit outlook, we reiterate the view from our 2007 report that solar power represents Big Things in a Small Package.

While solar’s rapid ascent will continue, we also recognize that the sector is approaching four “peaks” within the next three years. These four peaks… Click here to read the full executive summary (.pdf)