Tom Astle from National Bank Financial has put out a “solar for dummies” report that I found quite useful as a summary of how solar PV works, the economics, who are the players, and where the market is heading.

One interesting comment: “If the solar market continues to grow at more than 20 per cent and the benefits from volume continue to be found, it is predicted that the cost of solar module power could drop below $1/Watt within the next 15 to 20 years.” Then in brackets, Astle adds: “We think it could be sooner.”

He cites current prices being $3 to 3.50 per Watt. He said if the modules fell to $1/Watt and you assumed another $1/Watt for balance of plant and installation, “solar power could become cost competitive with baseload generation at $0.10/kWhr or less.”

That, against the backdrop of rising fossil fuel prices, looks pretty damn encouraging.

Astle, who I remember from his days of providing analyst coverage for the telecom sector (and that sick puppy Nortel), also predicts some major industry consolidation come 2008.

“According to our estimates, the capacity of solar producers is set to increase well in excess of silicon supply. Once that silicon supply bottleneck is fixed in 2008, we can expect a price war for solar modules and solar cells,” he writes. “We suspect that industry players have two years to get it right before competitive pressure mounts. Investors should watch this closely.”

Interesting days ahead. You can find a link to the National Bank solar report through Carmanah Technologies’ Web site. Click here.

Speaking of silicon, if you think the solar IPO market is cooling off, then look at this public offering from Norway’s Renewable Energy Corp., which boasts being the biggest maker of solar-grade silicon and multi-crystalline wafers. It also makes solar cells and modules.

REC’s shares skyrocketed on their first day of trading this week, giving the company a market value of nearly $10 billion. The IPO was 15 times oversubscribed.

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