What Size is the Global Solar PV Industry? Pick a Size, Any Size

These days the size of the solar PV industry is announced earlier and earlier each year, typically with little explanation of what is being sized. In reality, the PV industry, and this is true of all industries, is made of many metrics, all of which can be counted, combined and often misunderstood.

Market research is a research discipline that counts industry metrics in a very specific way — from point, to point to point. Figure 1 offers supply and demand PV industry metrics for 2015.

Figure 1: PV Industry Metrics 2015

Figures 2 and 3 isolate supply and demand PV industry metrics. In the case of demand, installations lag module shipments sometimes by a year or two depending on the application, and grid connections lag installations depending on the utility and the size of the installation.

Figure 2: Supply Side PV Metrics

Figure 3: Demand Side PV Metrics

Market Behavior

Real market behavior is not smooth and nor is it orderly; however, it may look that way from a distance. Figure 4 offers PV industry growth from 2005 through 2015.

Figure 4: PV Industry Growth 2005-2015

Take a peek under the hood and you will find that industry growth looks a bit different. Figure 5 offers PV industry growth in Europe over the same period. The feed-in tariffs (FiT) in Europe drove strong demand, but not necessarily consistent demand. Poorly designed FiTs and market behavior created a landscape that, in hindsight, looks like bad wiring. Retroactive changes to FiTs in some markets (Spain, Czech Republic) created a landscape of bankrupt systems and legal wrangling, while developers in Greece may not receive expected FiT payments.

Figure 5: Europe PV Industry Growth 2005-2015

Figures 4 and 5 do not capture the behavior of emerging markets during this same period. Markets are always in transition.

Figure 6: Select Market Growth 2005-2015

Lesson: Beware the smooth upward line — markets come and markets go, and low prices and incentives create bubbles and lead to crashes. Lift the hood and take a good long look at what is really happening and why it is happening, and remember … past behavior is the best predictor of future behavior.

Shipment Announcements and Reality

The size of the solar PV industry in any year is limited by the available crystalline and thin film cell commercial capacity — not pilot scale and not lab scale, but commercial capacity.

Manufacturers cannot ship more crystalline and thin film product than their available cell capacity in any year unless they have inventory from the previous year.

Outsourcing — that is, the buying and selling of cells and modules from manufacturer to manufacturer with everyone reporting the same reshipped MWs — has oversized the PV industry over time, often significantly.

Table 1: PV Industry Capacity, Shipments and Announcements 2015

Lesson: Announcements about cell/module shipments often ignore outsourcing and inventory and are assumed to have a one-to-one correlation to installations, which are assumed to be synonymous with grid connections. Oversizing the industry makes it very difficult to know what is really going on and thus develop a cogent strategy.

Announcements about industry size are often made to call attention to the media outlet or to an organization, and they are being made earlier and earlier — remember that research is a slow, rigorous process that does not lend itself to sweeping announcements.

Announcements are made for many reasons — to call attention to something, to take attention away from something, and occasionally, to announce something of real merit.

PV Applications Are Where PV Modules Are Installed – Yet …

Utility scale differs by country, region and often by the person offering the information. For example, in Japan, utility scale is >500-kWp; in Europe, many refer to utility scale as >1-MWp and off roof; and in China and the U.S., it is most often >20-MWp, but sometimes >10-MWp. No matter the system size, typically it is a commercial installation where the electricity is sold through a power purchase agreement or that receives a tariff that is either established by the government (China) or by tender bidding (Latin America and other countries). So, just how much utility scale is installed? It depends.

According to energy.gov, a microgrid is: “a local energy grid with control capability, which means it can disconnect from the traditional grid and operate autonomously.” Or, a microgrid is a power generating station which can produce, store and supply electricity to a dedicated load, with the possibility of islanding from the grid. Microgrids date back to the beginning of terrestrial solar primarily into the off-grid application. Currently the term is used to describe basically anything and thus, often the term means nothing. So, just how many microgrids are there? It depends.

In Sum

Solar, and all its technologies and participants, can be confusing. Look under the hood, check the wiring and then stand back and let it all tell the entire story.

Stay on top of the global solar industry. Learn more about Paula Mints’ Annual Photovoltaic Manufacturer Shipment Report here.

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