Things have been tough of late for those manufacturing PV products (unless you're based in China that is).
The global recession combined with the collapse of certain markets (like Spain) resulted in oversupply, price decreases and margin pressures, something the PV industry had not been used to and, more importantly (in many cases) were not ready for. And as if to add to this pressure, oversupply gave the lower-cost Chinese, Korean and Taiwanese manufacturers a major shot in the arm for their own exports.
Despite this, organisations like the EPIA announced a good year for PV in 2009, with 6.4 GW installed world-wide. Major organisations have been busily adapting to this new marketplace, restructuring and positioning themselves to address issues such as costs, labour, innovation and scale.
Of note is SunPower’s recent acquisition of SunRay - which will give it a pipeline of PV projects totalling more than 1,200 MW in Italy, France, Israel, Spain, the UK and Greece, not to mention a local presence and workforce in those markets, markets that all have positive incentive schemes in place which should – theoretically at least – give a boost to PV sales in these countries.
And then there’s Q-Cells, whose well-known ceo Anton Milner recently resigned from the company’s management board, echoing the demise of another renewable energy visionary in 2008 - Hans-Martin Rüther of Conergy (who presided over a period of incredible success but then over extended the company, tying it to a series of long term contracts that proved unsustainable).
Q-Cells has certainly not been shy of making punts on various technologies, but is now struggling with the industry-wide tightening of prices and emergence of cheaper alternatives, and is now engaged in a complete restructuring programme, having decided to write down three of its investments to zero – Solaria, Sunfilm and Sovello – while focusing on its core competencies of crystalline silicon, and CIGS thin film modules (through its start-up Solibro).
Such high profile casualties serve to focus minds, so where do the experts think we are at present in terms of the markets that the industry hopes will absorb modules as we move forward?
It would be remiss not to start with Germany, where all the talk is of the reduced tariffs that will come, well, sometime this year, probably around the beginning of July with a one off reduction in the tariff, depending on the installation type.
Despite lots of rumours and “scoops”, there still doesn’t seem to be any firm announcements as to what the level of cuts will be, and when exactly they will kick in. Originally, it was announced that roof installations would be reduced by 16%, field installations 15%, and that installations on farmland would no longer receive any incentive at all. But recent news coming out of Germany suggests that the cuts may not be quite as stringent as this.
This makes it difficult to know what to believe at the moment, and some experts are even of the opinion that the process of agreeing the changes could drag on even longer than anyone thinks before the new levels kick in: “It’s really wait and see,” says Navigant’s PV expert Paula Mints. “I think the BSW has done an excellent job of pushing back, they have a much stronger lobby than any other group I’ve ever seen, so it’s pretty amazing what they’ve been able to do”.
With that in mind, Mints predicts that the German market could experience a year where between 4 and 5 GW goes into the market as projects aim to get in ahead of the new tariff, and she feels that this prediction is airing on the side of caution.
After the reduced levels are introduced of course, is when many believe the difficulties will increase – especially for companies manufacturing in countries outside of the lower-cost-of-manufacturing regions.
And what of other markets, away from Germany?
Italy, say the experts, is also a very strong market currently. Mints believes the country may have reached its cap, (or will shortly reach the cap), but adds that the cap is seen as less of a finite barrier than caps in other countries have traditionally been, and as such new systems may continue to be incentivised until a new law kicks in (in 2012). Because of that she believes Italy could be a Gigawatt market this year.
The Czech Republic and Greece have also been touted as possible strong markets. Mints believes that the former installed 500 MW last year, and will increase that to 800 MW this year, but over and above that she cautions that the programme may be unsustainable. As for Greece, well, the country has a huge financial and economic storm to weather, so it is debateable whether the 3GW of projects apparently waiting to be developed will be developed any time soon.
The UK is another interesting case in point, with its Government having done very little on renewable energy for years, and then everything all at once in the space of 18 months. So, the country now has vast offshore wind plans (up to 35 GW or so), a mandatory energy efficiency scheme for many businesses - in the form of the Carbon Reduction Commitment (CRC) - which will begin in April. And it also has a micro-generation programme in the form of a new feed-in tariff. Could this create a good PV market? “If you do 20 MW a year over there, you’re doing well,” says Mints.
USA – the great PV hope
And what progress in the USA, which many have pinned their hopes on as the next major market after Germany. According to Mints, it is a growing market but progress is slow, and she believes that it will not become a major force before 2013: “You have to think of the US as you do Europe, it’s 50 different countries, and two-thirds of these 50 different countries are struggling economically with unemployment continuing to rise”.
In addition, President Obama – who campaigned on “environmental and job creation issues” has just succeeded in getting his healthcare Bill passed, and the feeling is that he has used up lots of political favours along the way. Getting a Climate Change Bill passed, or a Renewable Energy Standard (RES) included as part of another Bill for that matter, is unlikely to happen imminently.
Asian manufacturing strength
China has now leapfrogged the West to become the largest manufacturer of solar PV cells. And specialist manufacturing companies like Suntech and Yingli in China, and Mitsubishi and Kyocera in Japan, continue to innovate, as well as under cut the competition on price.
All of which makes life very difficult – as Q Cells and many other companies are finding out. And it’s likely to continue to be a challenging industry to operate in, especially when Germany's feed-in tariff changes do take effect.
This article is taken from the May/June issue of Renewable Energy Focus magazine...