The 2015 market for solar PV in four questions
Following the publication of the latest Solar Flare report www.IDTechEx.com/pvseries which is analyzing the latest global trends in photovoltaics, Miss Paula Mints, chief market research analyst with SPV Research, summarized some of the most important points relating to the market for solar PV in a Q&A session with IDTechEx principal analyst Dr Harry Zervos.
Q: What are we to expect from the PV industry in 2015?
A: Given changes to incentives in various markets as well as pressure in the US about the decrease of the US Investment Tax Credit (ITC) from 30% to 10% after December 2016, we can expect that same frenzied activity as always. The global PV industry has traditionally faced almost insurmountable pressures including expectations for ever lower prices, achievement of the ill-defined term grid parity, expectations of a technology breakthrough and expectations of continued double digit growth, among others. These expectations lead the industry to behave in a certain way, and this particularly applies to its necessary incentives.
Incentive risk is significant for the PV industry and unfortunately, misunderstood by many, including its investors. The grid connected PV industry continues to be driven by incentives. In the US, the 30% ITC is the primary driver.
We can expect a lot of activity in the US in 2015, particularly in residential and small to medium commercial, which are the traditional distributed generation applications. We can expect to see (and are seeing) some multi-gigawatt or utility scale plans drop to the side for funding reasons as well as logistical reasons, that is, if it cannot be installed by the end of 2016, it may not be viable.
Q: You say that you take a conservative approach to your analysis of the photovoltaic industry; can you share your philosophy?
A: I am a classic market research analyst. This means I adhere strictly to the basic rules of counting. Market research is the objective study of a subject using data gathered through primary research to characterize, analyze and forecast demand and supply for, in this case, the photovoltaic industry. It is a specific discipline where something is counted from point-a to point-b, then point-b to point-c, and so on. The point is to eliminate double counting and arrive at specific metrics for the purpose of defining a market or an industry. For the purpose of this practice, the raw material is counted until it becomes a wafer/ingot, then to the cell, then to the module, then to the first point of sale in the market (first buyer), then to the installation (end-user). Thin film shipments are assessed using the same methodology.
Fig 1. PV Industry Metrics for 2013. Source: IDTechEx in collaboration with SPV Market Research www.IDTechEx.com/research/pv
In the case of SPV Market Research the data go back >35 years, allowing for the identification of trends over time.
A classic market research focus should be on quantifiable metrics (data), announcements are not data. Announcements are made for a variety of reasons including: calling attention to something upcoming or new, re-calling attention to something previously announced, to call attention to an achievement (such as champion cell efficiency or commercial efficiency records), announce a product release, or take attention away from something negative, among other purposes.
The purpose of market research is to provide an objective analysis that managers and executives can use for business planning purposes.
Q: Having recently updated your forecasts, the latest shipment report for 2015 is due to be published in just a few weeks. What are the key points addressed in it?
A: This report describes the supply (manufacturing) side of the PV industry in detail, including a bit of demand data. Supply is where the technology is shipped from; demand is where it is shipped to and what is done with it.
You can see the report at www.IDTechEx.com/pvship.
This report will discuss PV industry c-Si cell and thin film manufacturing capacity, production, shipments, inventory and pricing by country, technology and manufacturer. The report always includes five years of history, so that trends can be adequately described and analyzed. This year's report will go into more depth about the subject of module assembly capacity by country. Unfortunately, it is assumed that module assembly is the same as cell manufacturing. There is currently 54-GWp of module assembly capacity and 44.7-GWp of c-Si cell manufacturing capacity. Thin films are a different subject. The size of the industry during any calendar year is equal to its cell and thin film capacity plus inventory. When you consider the problem of double counting (lots of outsourcing in the PV industry), it is clear that misunderstandings and double counting have led to a significant oversizing of the PV industry overtime.
The report always includes a five year technology (c-Si and thin film) forecast.
Q: Talking of c-Si, crystalline PV continues to dominate the market for solar modules, do you see this changing and if so, when?
A: I do not see this changing. Unfortunately, with all the champion cell announcements, which are misunderstood as commercial capability and the expectation that a game changing technology is on the cusp, the value of crystalline (the industry's workhorse) and thin film PV technologies is often undervalued. Technology advancement is incremental, that is, steadily and over time. The twin development goals are higher efficiency and lower manufacturing cost. Lower prices are a different subject. Prices must allow for sufficient margin for the manufacturer to continue investing in R&D. The current technologies are pretty amazing. I do not know another technology that you can expect to sit in the sun and reliably generate electricity for at least 25 years.
The updated "Photovoltaic Manufacturer Shipments: Capacity, Production, Prices and Revenues to 2020", published by IDTechEx in collaboration with SPV Research is due for publication in the middle of April. For more information on the photovoltaic reports available see www.IDTechEx.com/research/pv.
You can also join Miss Paula Mints' webinar on the topic of solar PV organized by IDTechEx and scheduled for the 8th April - registration will be available at www.IDTechEx.com/webinars from two weeks before.
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Top image: Nellis Solar Power Plant, Nevada, USA.