LDK Solar Co., Ltd. - Asia Europe Clean Energy (Solar) Advisory Co ...

module production will increase from 1.5 gigawatts in 2005 to 12.0 gigawatts in 2010, representing a
compound annual growth rate of 51.6%.
Global Annual Crystalline Silicon-Based Solar Cell/Module Production
Gigawatts
14
12
10
8
6
4
1.5
2
0
Source: Photon International
Key growth drivers
2.3
3.2
2005 2006 2007 2008 2009 2010
We believe the following factors will continue to drive the global demand in the photovoltaic industry:
Rising Prices of Conventional Energy Sources. According to The International Energy Agency's
estimate, approximately 80% of the world's electricity in 2004 was generated from fossil fuels such as coal, oil
and natural gas. According to the United States Department of Energy's International Energy Outlook,
worldwide demand for electricity is projected to increase from 14.8 trillion kilowatt hours in 2003 to 30.1
trillion kilowatt hours by 2030. The prices of conventional energy sources, including oil, gas and coal, have
been steadily increasing in recent years. A more sustainable energy source is needed to address price increases
of conventional/fossil fuel energy sources given the limited nature of fossil fuel supply and escalating
electricity consumption.
Government Incentives for Renewable Energy Sources. Governments around the world are implementing
renewable energy policies to encourage the use of clean and sustainable energy sources, such as solar
energy that does not consume any fuel and produces no pollution during operation. Use of solar power has
been growing at a fast pace in countries where incentives are offered by their governments to encourage its use.
Countries such as Australia, China, Germany, Japan, Korea, Spain and the United States have offered or plan
to offer substantial incentives in the form of direct subsidies for solar power system installations or rebates for
electricity produced from solar power. Increasing government support for solar energy in regions, such as
California and southern Europe, which receive many hours of sunlight and where solar energy is more cost
competitive, is also driving demand.
Tightening of Environmental Regulations. Solar power is capable of generating electricity without
producing pollution such as gaseous or water emissions or noise during operation. Governments around the
world are adopting initiatives aimed at addressing worldwide environmental concerns and climate change risks
associated with the use of fossil fuel. Problems such as greenhouse gas emissions are being addressed by
initiatives such as the United Nations Kyoto Protocol and many national and regional air pollution regulations.
Increasing Cost Competitiveness of Solar Energy. According to Photon Consulting, the average prices
of solar cells and modules are expected to decrease over the next few years as a result of improved production
technologies and manufacturers attaining economies of scale. Accelerated aging tests have also shown that
solar modules can operate for 30 years or more without the need for major maintenance other than the
cleaning of module surfaces, making them inexpensive and reliable to operate. Solar power systems are also
more cost-effective for use in remote rural applications, where grid-connection costs are prohibitive. A
combination of these factors is increasing solar energy's cost competitiveness compared with other alternative
energy sources.
68
5.0
8.1
12.0