Strong solar growth to resume in 2010, says analyst

In its latest report, Needham noted that substantial growth in solar demand will be driven by price stabilization, improvement in the credit markets, regional demand jumps on favorable government policies as well as the increasing electricity costs.

Needham referred to the Street whose predictions are that the solar revenue will grow by 3 percent sequentially in the first half of 2010 and by 19 percent in the second half of the year. These estimations, Needham highlighted, are "too conservative, as the demand picture continues to improve into the new year and prices remain stable."

According to Needham, Germany will remain one of the leading solar markets. But, the worldwide solar industry has become less concentrated, and newly-formed solar markets are expected to report strong growth in a near future.

In more precise terms, Needham said it anticipates that Germany declines by about 35 percent of worldwide solar installations in 2010, versus 52 percent in 2009, with emerging solar markets such as the U.S., Italy and China each growing share. For instance, Chinese solar installations are growing from just 47MW in 2008 to 1GW in 2012, for a CAGR of 115 percent.

In the report, Needham attracted investors' attention on cost leaders and companies that are leveraged to key growing markets in 2010. The market research group indeed expects that companies with good cost structure will generate solid profits, and companies with strong project pipelines will deliver outperforming revenue growth. It highlighted JA Solar Holdings and SunPower.