Jason Eckstein from Lux Research ranks makers of silicon and thin-film modules and inverters in several areas of competitiveness, and analyzes who comes out on top and why.
by Jason Eckstein, Lux Research
September 15, 2010 – Over the last year, the solar industry has experienced unusual volatility. Following a disappointing 2009, the German government announced and repeatedly delayed further FIT reductions until the middle of 2010, leading to a booming market as installers rushed to get projects in the ground to lock in high rates. While this turnaround has stabilized module pricing for the time being, manufacturers are now bracing themselves for further price declines and stiffer competition.
As module makers prepare for a renewed trench war based on production scale, inverter players are riding the wave of a growing market without the crippling price declines facing the broader PV industry. They aim to stake their competitive territory based on performance improvements and novel architectures.
Based on information gathered during more than 200 interviews with executives of solar companies, we scored manufacturers based on the strength of their technologies, business execution, and relative maturity in the marketplace. Based on these scores, we positioned companies on the Lux Innovation Grid to compare their competitiveness against other players in the space. We ranked module-makers in crystalline silicon (x-Si), thin-film silicon (TF-Si), cadmium telluride (CdTe), copper indium gallium diselenide (CIGS), and concentrated photovoltaics (CPV). We also ranked inverter makers competing for residential/small commercial and large commercial/utility markets.
|Lux Innovation Grid, Near-term IPO candidates. (Source: Lux Research)|
The rankings reveal several important trends:
- Crystalline silicon players move to dominance through production scale. Crystalline silicon modules are increasingly dominated by Chinese players, which are dramatically increasing scale and improving efficiencies with new technologies. Trina Solar and Yingli join Suntech Power in challenging industry stalwart SunPower in the dominant category, while new entrants like Samsung Electronics and LG Electronics are rising quickly. Undistinguished manufacturers will continue to be acquired by conglomerates seeking to add presence in the solar market. Recently, Korea’s Hanwha Chemical acquired a 49% stake in module maker Solarfun, presumably to bring its legion of technical staff to bear on improving the company’s technology. These late-in-the-game acquisitions enable conglomerates to build a significant position in the solar market quickly, without having to build capacity themselves. Looking forward, smaller players like JA Solar, ET Solar, and CentroSolar are all possible targets, given their history of success yet smaller size than behemoths like Suntech Power.
- Clear leaders emerge among CIGS and CPV module-makers. While familiar trends continue to advance in x-Si, TF-Si and CdTe, clear leaders have finally emerged in CIGS and CPV. Among CIGS players, Q-Cells subsidiary Solibro and start-up Miasolé have moved into the Lux Innovation Grid’s “dominant” quadrant. Meanwhile, in the CPV category, Amonix has broken away from its competitors followed by Concentrix and Solaria, while the rest of the CPV field struggles.
- Technology improvements provide an edge among inverter players. Despite their lead in the large commercial-scale and utility-scale segments, SMA and Siemens are technologically surpassed by innovative companies like Advanced Energy and Satcon, which could both easily move into the “dominant” quadrant with greater scale and execution. Smaller inverter manufacturers with strong products will become attractive acquisition targets for power electronics conglomerates that are able to add a strong brand and demonstrate staying power to potential customers. Concerns over its long-term viability was the proximate cause for the takeover of financially shaky Xantrex by Schneider Electric in late 2008, while the consistently unprofitable Satcon and relatively diminutive Outback Power Systems will prove likely takeover targets in the coming year.
- Start-ups appearing in the Lux Innovation Grid’s “dominant” quadrant are likely IPO candidates. Amonix, Enphase, and Abound Solar have all met critical milestones over the past year and are in strong positions to launch successful IPOs in the coming year, ending the drought marked by failures including Trony, Solyndra, and Daqo. Enphase is likely to move the most quickly, having already reached high sales volumes in the inverter market. Its fabless manufacturing model makes it an attractive solar investment in an industry where investors have inadvertently found themselves investing in equipment, rather than device manufacturers. HCPV is another unusually low-capex technology domain where Amonix is a top contender. Lastly, CdTe developer Abound Solar is swiftly following in the footsteps of First Solar but aggressively positioning itself as a second source supplier, leveraging the business development efforts of its competitor.
Jason Eckstein is a research associate at Lux Research, working in the solar intelligence practice where he has conducted research in technology assessment and market sizing, been lead author for solar market reports, and contributed to solar consulting projects spanning multiple PV technologies and end markets. He holds a B.S. in Applied Physics and Applied Mathematics from Columbia University.