Following a surge in demand for solar PV modules between 2012 and 2015, margins increased for top module manufacturers and the supply-demand balance was tightened for the coming years. Across the industry, this supply-demand rebalance gave manufacturers the opportunity to escape—at least temporarily—from the razor-sharp margins usual in commoditized markets.
The main players in the market have been announcing small capacity expansions since early 2014, but these announcements have soared since November 2015. As they expand capacity, manufacturers are starting to introduce new technologies that could differentiate them from the competition.
The dramatic reduction in solar module prices during the past few years has exposed the importance of the balance-of-system (BOS) costs. Module and inverter manufacturers are increasingly finding themselves squeezed by the growing number of grid requirements, customer demands for increased functionality, and the need for solar to keep reducing costs to achieve grid parity in most of the world.
According to the latest U.S. Solar Photovoltaic System Cost Benchmark: Q1 2016 report published by the National Renewable Energy Laboratory, non-equipment-related costs were $1.91/W, while the module plus inverter cost was only $0.85/W for a residential installation in the U.S. in 2015. For utility-scale projects, these costs vary significantly depending on the size of the installation, but non-hardware-related costs usually represent between 45 percent and 55 percent of the final cost of a project.
Manufacturers have targeted high-efficiency module technologies that allow them to keep module prices similar to current levels while simultaneously reducing other costs in the value chain. Passivated emitter rear cell (p-type PERC or simply PERC) modules and negative type (n-type) semiconductor modules have been the favored technologies for capacity expansion.
Tough Market to Test the Value of New Technologies
Supply and demand shifts are already testing the value of high efficiency in the market. The capacity expansion that has happened in the industry over the last two years, declining European and U.S. markets in 2017, and an expected flat Chinese market for 2017 have provoked a slump in module prices.
Module and cell prices plunged after China, which represents a third of the global market, announced a 2016 target of 18.1 GW in June 2016. China had already installed 20 GW by then, although part of that went into experimental rooftop projects and charitable installations in impoverished areas that do not count toward the target.
But the growth of advanced modules will continue in the country. In June 2015, China’s National Energy Administration announced a policy to promote advanced PV technology product applications and industrial upgrading, emphasizing that the power output for 60-cell multi-Si modules must be higher than 255 watts and that output for mono-Si modules must be higher than 260 watts. The first phase construction of the program was made up of 1 GW in 13 different projects—all completely connected to the power grid in late June 2016.
Due to the success of this program, the high-efficiency share of China’s PV target for 2016 rose more than five times to 5.5 GW—30 percent of the total market. Additional efficiency requirements also favor mono-PERC modules over standard mono-cSi modules, effectively protecting the players that have invested in efficiency from the worst of the market bloodbath. Yet, those players will still need to compete with each other.
In other parts of the world, new technologies like bifacial n-type mono-cSi modules are entering the stage. MegaCell’s BiSoN technology entered the market last year and installed a large demonstration project in Chile to show the potential of this type of cell. Other bifacial manufacturers are making moves toward mass deployments. Sunpreme installed a 13 MWp bifacial system, and Yingli Solar now has a 50 MWp project.
Perhaps the most important bifacial project to date is EDF Energies Nouvelles’ Blumex Power, located in Guaymas in the northern Mexican State of Sonora named after the desert in the same area. The proposed 90-MWp facility participated in Mexico’s second long-term electricity supply and clean energy credits tender. The average price of the winning bids was $33.47/MWh (including the credit), one of the lowest ever globally.
The fact that EDF’s Blumex project was among the winning projects shows the potential that bifacial modules have and shows the technology can compete and even—in the right circumstances—go head to head with standard modules and win. Preliminary work done by Dr. Radovan Kopecek from ISC Konstanz suggests that if a bifacial system is installed correctly, the levelized cost of electricity (LCOE) will be $10/MWh cheaper than using standard technology. If a simple tracking system is used, the LCOE can be lowered an additional $10/MWh ($20/MWh).
Advanced Technologies and Reduced BOS Costs Lead to a Win-Win Situation
The advantages that advanced module technologies can give project developers should not be underestimated. The technologies still need to and can improve. Light-induced degradation can be a problem for PERC modules, while the short track record of bifacial n-type modules and the difficulties in stimulating project performance make them difficult to finance.
But since everything points to new bloodshed in the industry in the next year or two, any edge that manufacturers can give developers will be a competitive advantage. If that edge comes from reducing BOS and not module prices (and hence manufacturer profitability), then there is a win-win situation for manufacturers, developers, and especially society as a whole, as everybody gets the cheapest electricity possible in a sustainable way.
Lead image credit: Michael Dorausch | Flickr