The solar energy market has undergone a dramatic transformation over the past two years, driven by a new abundance of polysilicon, the effects of the worldwide financial crisis, and the plunging price of solar modules.

As a result of these factors, the solar industry has shifted from supply-constrained to demand-driven, and a few strong companies have been able to improve their revenues and market share based on a low cost per watt combined with high module efficiency.

According to a new report from Pike Research, this market realignment will set the stage for a new era of solar growth over the next several years, and the cleantech market intelligence firm anticipates that by 2013, in many markets, solar costs will reach the long-elusive goal of grid parity, the cost of electricity from traditional power sources. Between 2010 and 2013, Pike Research forecasts that solar demand will increase at a compound annual growth rate (CAGR) of 24%.

“Solar prices are plunging quickly, and lower pricing will fuel a surge in demand in 2010 and beyond,” says senior analyst Dave Cavanaugh. “However, pricing trends and oversupply of solar modules will also place huge pressure on solar suppliers, especially Tier 2 and Tier 3 companies that are not well-equipped to weather the storm. We expect a significant shakeout among solar suppliers in the next two years.”

According to the report, 10 key factors, which are listed below, will determine success and survival for solar suppliers during this period of industry consolidation.

Low-cost polysilicon and wafers

Low-cost process materials

Low-cost processing

Module efficiency

Economies of scale

Market presence in key growth countries

Supply chain integration

Strong balance sheets and internal financing of growth

Module manufacturing in North America and low-cost European Union countries

Strong position in niche markets

Pike Research’s report, “Global Solar Energy Outlook” includes a detailed analysis of key solar industry players and outlines the key differentiators that will cause some suppliers to thrive, and others to fall by the wayside. To read a free Executive Summary of the report click here.