Paula Mints SPV Market Research/Strategies Unlimited
November 22, 2012 | 12 Comments
The welcome end of 2012 approaches and with it hopefully a slowdown in the steady march of solar failures, depressing financials and mind numbing trade disputes. Thankfully, the long, long, long, oh so long US presidential campaign season is over, though another is just 'round the bend. Hopefully the recession in Europe will be short lived and the U.S. and other countries will not slip into another recession. Among these wishes for 2013, 2012 can be remembered for the starkly different attitudes held by participants along the solar industry value chain.
At the end of 2012,PV technology (cell and module) manufacturers primarily are holding a view (supported by their balance sheets) of doom and gloom. Balance of systems (BOS) manufacturers and installers, meanwhile (enjoying the rewards of low PV module prices) are more likely to believe that “Everything is Coming up Roses.” To borrow liberally from the Stephen Sondheim lyrics: Curtain up! Switch on the inverter! You’ve got nothing to hit but the peak! You’ll be swell, you’ll be great. I can tell, just you wait. That profitable kWh is due! Solar, everything’s coming up sunshine for me and for you.
In the U.S. there is currently a tug-a-war between the two philosophies, with BOS and demand side participants enjoying profits and seeing strong growth going forward. There is also the view that perhaps the U.S. should be satisfied with its role as a promising market for solar installations and step back from manufacturing.
U.S. technology manufacturers and module assemblers see things differently. From the technology manufacturer’s point of view, a leveling of the playing field (duties on imports, government support or, incentives for using U.S. made technology) could help the U.S. industry spring back to life. Table 1 presents a history of manufacturing from 1997 through 2011. Though this table does show U.S. technology manufacturing – along with Europe and Japan based manufacturing – losing share, it also clearly indicates how quickly recovery could be achieved. In terms of the U.S., it is currently the home of promising technology startups currently in quiet mode waiting out the doom and gloom – this is also true for Japan and Europe.
Table 1: Regional Shipment Data, 1997-2011
Figure 1 isolates U.S. demand and supply history from 2006 through 2011. Supply participants are manufacturers of technology. Demand participants buy technology. Demand participants include module assemblers, installers, distributors, system integrators, end users and other manufacturers. Note that in Figure 1, demand continues to increase while supply decreases significantly. In the U.S., and this is true for other regions, there are no simple explanations for competitive difficulties. At this point, with prices at or below cost for most manufacturers it is not survival of the fittest – it is survival by any means available.
Figure 1: U.S. Supply and Demand, 2001-2011
To sum up, and borrowing liberally from Irving Berlin’s There’s No Business Like Show Business: There’s no business like solar business, like no business I know. Everything about it is appealing, everything the utilities will allow. Nowhere can you get that happy feeling, then when you are installing that extra kilowatt hour.
In other words, solar is an addictive business that will continue to provide value all along its value chain as well as to climate change doubters and those who chose to stand on the sidelines.
Lead image: Optimism and Pessimism via Shutterstock