IMS Research: PV market under heavy price, supply pressures

The PV market is undergoing changes and challenges, especially in the U.S., because of rapid growth potential globally

09/06/2011


When photovoltaic module supplier Solyndra announced it would close its U.S. manufacturing facility, it marked the third time in a month such an announcement had been made.

IMS Research analyst Sam Wilkinson noted the challenges in the PV market, especially for smaller companies, because of the highly competitive global market. Despite the rapid growth potential for the PV market, and recent announcements of manufacturing expansion by companies such as Schneider Electric and Siemens of increased manufacturing capacity in the space, the PV market is expected to be price-driven for quite some time. Wilkinson spoke with CFE Media about the recent changes in the market and ways new manufacturers can try and gain a foothold in the PV market:

CFE: The consolidation in the PV manufacturing market seems to be driven by supply-side issues. It’s a huge growth market, but late arrivers on the manufacturing side are facing higher costs. What are the cost barriers for PV manufacturers right now?

Wilkinson: The main cost barrier is certainly getting to large-scale production to get costs down. Suppliers can’t afford to be in the low volume/start-up mode for long.

CFE: What is the manufacturing cost advantage for the Chinese manufacturers? How big a role do issues such as quality and other “soft” manufacturing costs play in this market?

Wilkinson: China benefits from strong governmental financial support, low labor costs and low electricity costs. There certainly has been some concerns over the quality of Chinese Tier-2 product in the past. However, the more established Tier-1 brands have certainly already overcome the perception that Chinese product is of a unacceptable quality.

CFE: Let’s look at the other side. We’ve seen global manufacturers like Schneider Electric and Siemens announcing expansion of their PV converter manufacturing business, and they see huge growth potential for PV in the U.S. and elsewhere. How quickly are companies looking to adopt solar as an energy source, and what’s the growth potential?

Wilkinson: There certainly has been some success for large industrial electronics companies entering the PV market. This is most typically seen in the inverter space (as the these are often similar to a company’s existing products). The solar market is expanding fast, the other attractive thing about the inverter space (in comparison to modules) is the relatively fewer number of suppliers.

CFE: Do you see PV adoption growth overtaking supply anytime soon?

Wilkinson: Given the huge volume of capacity that has been bought online over the last few years, and the comparatively steady growth that we forecast for demand, I definitely see oversupply being more likely than undersupply over the next few years.

CFE: How can smaller manufacturers of PV survive in this market right now?

Wilkinson: I believe that right now (and for the next few years), small manufacturers either need to have a unique product (with a unique value proposition) and a strong brand, or they need to have scale and volume in order to reach cost structures that will allow them to compete.



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