Photovoltaic market revenues
Global inverter shipments
Spurred by improved financing conditions and a rush to beat feed-in tariff cuts in Europe, international solar energy market research and consulting company Solarbuzz reports global photovoltaic (PV) demand soared to 3.82 GW, up 54% quarter-on-quarter. The PV industry remains on target to deliver more than 15 GW in installations this year.
“The rush to install in Germany ahead of tariff declines in mid-2010, combined with strong incentive programs across Europe—especially in Italy, France, and the Czech Republic—and an improved financing environment, drove the global PV market over three times the level in Q209,” noted Craig Stevens, president of Solarbuzz.
According to the latest edition of the Solarbuzz Quarterly Report, global market demand for the second quarter of 2010 was only 2% less than the global market’s previous quarterly peak of 3.92 GW in the fourth quarter of 2009.
As a result of 2010 performance to date, Solarbuzz also raised its five-year demand scenario forecasts in the report. Total industry revenues (Fig. 1) were approximately $17.2 billion in the second quarter of 2010, compared to $12.0 billion in the first quarter of 2010 and $6.2 billion in the second quarter of 2009.
Germany, at 2.30 GW, accounted for 60% of global demand in the second quarter of 2010. The next largest country market was Italy, which grew 127% quarter on quarter, yet was still just 11% of the size of the German market. France and the U.S. also put in strong performances.
On the supply side, polysilicon, wafer, and cell manufacturers reached capacity utilization rates of between 75% and 87%. Despite an increase of 495 MW in wafer supply over the past quarter, wafer capacity represented the most constrained part of the industry chain.
Among cell manufacturer shipments, the top five comprised First Solar, Suntech Power, JA Solar, Yingli Green Energy, and Trina Solar. Among the top 12 cell manufacturers in the second quarter of 2010, six Chinese manufacturers accounted for 55% of shipments, up from 43% a year ago. Both upstream and downstream module inventories in MW terms held almost perfectly steady at the end of the second quarter compared to the prior quarter end.
After six quarters of declines in factory gate prices, there were modest rises in short-term contract prices in Europe. However, weighted average factory gate modules prices are still down 24% in U.S. dollar terms from one year ago.
First-tier Chinese cell and module manufacturers that had priced competitively in the first six months of the year moved in to a forward sold position, which, in turn, allowed European factory gate prices to rise 2% to 4% by the beginning of the third quarter of 2010. A strong yen is helping to ensure that Japan remains one of the best markets to place product.
Looking into 2011, the most challenging quarter will undoubtedly be the first quarter of 2011. Leading European markets, including Germany, will face large reductions in tariffs at the beginning of the year.
Even with careful phasing of projects and price reductions, market demand is projected to be less than 50% of module production. As a result, the analysis forecasts upstream and downstream module inventory days to increase significantly by the end of the first quarter of 2011.
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“Historically, the PV industry has often exuded over-optimism in the face of uncertain end markets. However, the recent industry conference in Valencia confirmed two prevailing industry positions—one that emphasizes oversubscribed order books, the other that focuses on the German tariff declines and a demand reduction next year,” Stevens concluded.
The latest data-driven Solarbuzz Quarterly Report brings together a comprehensive analysis of industry production, shipments, inventory, market demand, and the total price picture. The report also includes corporate data for leading company quarterly cell production and company data through the PV chain with financial indicators.
Inverter Market To Expand Ninefold
If photovoltaics (PV) are taking off, can solar inverters be far behind? According to iSuppli, global inverter shipments (Fig. 2) are set to exceed 23.3 million units by 2014, up by a factor nine from 2.6 million in 2010. Revenue will rise to $8.9 billion in 2014, up from $5.3 billion in 2010.
But success in the market for power inverters will hinge upon suppliers’ capability to provide the lowest long-term costs and upon their short-term wherewithal to source sufficient quantities of key components.
“Solar inverters are on track to become one of the world’s highest-volume ruggedized electronic systems,” said Greg Sheppard, chief research officer for iSuppli.
Despite such soaring demand, the average price per watt for inverters worldwide will decline 13.5% this year. In particular, Asian suppliers are trying to drive prices down with lower costs, Sheppard noted, even though they have been challenged to deliver bankability—i.e., the capability to provide a lower total cost of ownership (TCO).
“Besides the upfront acquisition cost, other competitive factors will separate the winners from losers during the next few years,” Sheppard observed.
Apart from the rising competitive pressures, the increasing market share of larger inverters, which boast a lower price per watt, is reducing pricing. Furthermore, suppliers are having difficulties in countering customer expectations for continual price reductions. The purchase price of an inverter represents only a portion of its actual cost as part of a solar system.
“iSuppli believes that inverter suppliers increasingly will be valued based on their impact upon the levelized cost of energy (LCOE), a metric that takes into account not only the acquisition cost of an inverter but also total energy production and the 20-plus-year lifecycle costs of an inverter within an installation,” Sheppard said.
Not all inverters are the same, however, when it comes to LCOE, and inverters are the most failure-prone component of a PV system.
“Initial acquisition costs are important, but the lifetime costs of inverters loom larger in return of investment (ROI) equations for PV system owners,” Sheppard pointed out. “Thus, quality and reliability are key competitive advantages in the inverter business.”
A key issue last year and partway into this year revolved on adequate production capacity to make inverters. However, a lingering shortage of electronic components has emerged now as an ongoing challenge for inverter companies.
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Among the most troublesome components to source are insulated gate bipolar transistor (IGBT) modules, which are in short supply and difficult to obtain for many inverter companies. According to Germany’s SMA Solar Technology AG, the world’s leading solar inverter supplier, component shortages have limited the company’s shipments in recent quarters.
Once a mature product with predictable supply and demand dynamics, IGBTs now are experiencing rising sales in a number of hot applications, including automotive electronics as well as PV and wind inverters. Combined with conservative investments in new IGBT capacity, the strong demand has spurred a supply crunch. Other inverter components in short supply include DSP-based controllers and certain types of capacitors.
Inverter suppliers also will have to keep up with technological advances that are improving the total energy harvest of solar power. Most prominent among these is module level power management (MLPM) technology, consisting of microinverters and optimizers.
Used with each panel, the products aim to ensure that every panel produces at full potential. Microinverters include the dc-ac inversion function, while optimizers need to be coupled with a string inverter. The leader in microinverter shipments is Enphase Energy, while SolarEdge is number one in the optimizer arena.
MPLM’s success is forcing traditional inverter companies to pay attention and take action. A key advantage of MLPM solutions is their capability to raise energy harvests. Depending upon their particular installation, location, and panel choices, solutions that deploy MPLM technology can boost energy-harvest levels by 2% to as much as 15%.