The solar photovoltaics market is poised for a major comeback that could surge to $155 billion by 2018, according to a report from Lux Research.

“Right now, the solar industry is in a kind of dire situation,” said Ed Cahill, Lux Research analyst and author of the report, Solar’s Great Recovery. “The capacity grew to twice the demand, which resulted module prices dropping to the price of producing them or below.”

That has meant that manufacturers have been operating on near-zero-percent margins.

“People are going out of business and everyone has been worrying about the solar industry,” Cahill said.

The rapid collapse in solar panel prices has opened up new markets to the technology that would not have been able to offer strong subsidies.

“In 2011, Italy and Germany accounted for half of all installations,” Cahill said. “That’s shifting now.”

Countries like China, The United States and Japan are leading the market now and probably will for some time. Emerging markets like South America, Africa and India are also ramping up solar programs. The market conditions are ripe for industry growth.

“With rising demand and reduced capacity, we’re projecting that those two will get within 12 percent of each other by 2015,” Cahill said. “That’s healthy.” The difference between supply and demand will allow for price stabilization. "The cost of solar modules is unlikely to ever go up significantly again", Cahill said. Manufacturers are still finding ways to reduce their costs and can expect a stabilized process to result in better profit margins.

Struggling start-up solar companies will offer larger manufacturer deals on valuable intellectual property, according to the report. A recent example of such a transaction is Hanergy’s acquisition of Miasole, which announced in 2012 that it developed a CIGS solar module with a record 15.5 percent efficiency. Hanergy paid $30 million for the company that investors put more than $500 million into.

“Consolidation is natural,” Cahill said. “It’s essential to getting the market back to equilibrium.”

Utility-scale solar installations will likely rule as the fastest-growing market segment in emerging markets, but commercial-scale installations will likely make up the bulk of new solar, according to Cahill’s report.

China will be the world’s leader in solar development, installing 12.4 gigawatts in 2018. The U.S. will come in second with 10.8 gigawatts and Japan will probably be the third largest solar market, Cahill said.

“Manufactures’ nightmare is turning into a long-term boom for the industry,” Cahil said.