The World's #1 Renewable Energy Network for News, Information, and Companies.
Untitled Document

The Often Unprofitable, Always Challenging Road to Success of the Photovoltaic Industry

Now you see it now you don't – disappearing margins for PV manufacturers are not a magician's trick, nor are they the phenomenon of current solar times. The low to zero to negative margins un-enjoyed by today's technology manufacturing sector are the result of years of choices made by an industry stalwart in its belief that solar is the answer yet beset by end users who, having many choices, many times choose something else.

For most of its history manufacturers have wielded little control over the price function.  This was true because solar is the energy technology interloper trying to take share from subsidized conventional energy.  The PV industry was also trying to change the buying paradigm from renting to owning the means of production.  No technology change – including indoor toilets) has come easily.  For the photovoltaic industry (and all solar) it has been difficult to sell energy buyers on the vague concept of energy independence, meanwhile the pay off and ROI arguments had limited success.

Any industry forced to push its product into the market will not have control over its price function.  When promises of extremely low system prices are inserted into the mix the goal becomes antithetical to the development of high quality, long lived and reliable technology.  The only tool in such a difficult pricing ecosystem that can and almost always works is aggressive pricing for share.  Aggressive pricing is not unique to the PV industry.  Periods of aggressive pricing can be picked out from most industry’s histories. 

For the PV industry, all regions and most manufacturers have practiced aggressive pricing from one time or another.  Panicked pricing is something entirely different, and this is the situation that the PV industry is currently embroiled in – with promises of grid parity, expectations from the installers/system integrators, and more. From end users to government entities (those that legislate either for or against incentives), the industry is currently caught under a ton of expectations with little wiggle room and no way to go but down in terms of prices. This is not a healthy situation and it is very difficult to change.  If it were to change, system integrators and installers would face significant margin pressure themselves. 

The current pricing climate is truly a no-win situation.  Figure 1 presents cell/module revenues to the first buyer from 2001 to 2012, with a forecast through 2016.  The revenue data in this figure does not include inventory reselling, or outsourcing (rebranding of technology by module assemblers and other technology manufacturers).  

Figure 1: PV Cell/Module Revenues to the First Point of Sale

Who’s on First, and if Everyone Is Losing Money, Does it Matter?

It is the time of the year when the top ten manufacturer lists come out and a good time to pose this (hopefully) rhetorical question … if the manufacturers on the top ten list have low or negative margins, high debt and risky profiles, what does the list mean?  Granted, low margins have historically been an industry reality but it should not be viewed as the status quo.  Removing subsidies for all energy technologies would help make solar competitive while the high prices for conventional energy might just convince energy buyers of the value of energy independence. 

Table 1 offers the top ten lists of PV cell and modules manufacturers to the first buyer from 2002 through 2012.  Note that some on this list are no longer producing. Also note that the names have changed overtime. Sharp Solar has the distinction of being at the top of the list for the longest period since 2000. 

Table 1: Top Ten Cell/Module Manufacturers 2002 – 2012

Conventional Wisdom

There is an argument to be made that true wisdom should not be conventional…nonetheless, CW is rumbling lately that PV technology manufacturing will now be in Asia due to low manufacturing costs.  Aside from the fact that if all manufacturers in all regions are losing money and struggling to survive regional leadership has switched over time.

The US was the manufacturing leader for many years, followed by Japan, Europe and now China.  Eventually another region or country will take over cell/module technology shipment leadership.  It would be best if this happened in a healthy industry with margins that included room for R&D and a marketing concept that educated and then wrenched electricity consumers free from renting electricity to owning the means of production.  Table 2 offers regional shipment leadership from 2002 through 2012. 

Table 2: Regional Shipment Leadership 2002 – 2012

Lead image: Dark road via Shutterstock 

Untitled Document

RELATED ARTICLES

Welspun Commissions 52-MW Solar Power Plant in India

Vince Font Leading Indian solar developer Welspun Renewables has commissioned the construction of a massive solar plant in the state of Maharashtra. The planned 52-megawatt (MW) solar plant will be located in the city of Baramati. The...

Regional News from the July/August 2015 Digital Edition of Renewable Energy World

Renewable Energy World Editors EcoFasten Solar announced that it launched a new mounting "Rock-It System" that it would be displaying during Intersolar. Product compliance was determined through testing per UL Subject 2703, which reviews integr...

SkyPower Inks $2.2 Billion Deal for Massive Solar Power Plant in Kenya

Eric Ombok, Bloomberg Kenya’s Energy Ministry and SkyPower Global Ltd. will sign a $2.2 billion agreement on Sunday that paves the way for the Canadian company to develop a 1-gigawatt solar project in East Africa’s biggest economy. The solar pro...

Making a Match: How Solar Companies and Banks Hook Up

Jennifer Runyon The announcements are fairly frequent: SunPower Partners with Admirals Bank for $200 Million Solar Loan Program, Deutsche Bank to Lend $1 Billion for Japanese Solar Projects, Financing Partnerships Drive North Carolina's So...

CURRENT MAGAZINE ISSUE

Volume 18, Issue 4
1507REW_C11

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @megcichon @jennrunyon

FEATURED PARTNERS



EVENTS

Presenting at Infocast's Utility Scale Solar Summit 2015

Oct. 21, 2015 4:30-5:15pm Albie Fong, National Director, Solar Frontier ...

Utility Scale Solar Summit 2015

Oct. 21, 2015 4:30-5:15pm Albie Fong, National Director, Solar Frontier ...

5th Annual Hydro Plant Maintenance

Join maintenance professionals to discuss the challenges in maintenance ...

COMPANY BLOGS

Behind Every Good Decision

When something about your business isn’t working, you set out to c...

Clean Energy Patents Maintain High Levels in First Quarter, Solar L...

U.S. patents for Clean Energy technologies from the first quarter of 201...

An Overwhelming Paradox

I’m sure we’re all very familiar with the feeling of being o...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS