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Among the renewable energies, solar energy tapped through PV technology has become the widely accepted source of power generation. International Energy Agency (IEA) studies show that the solar power will account for 5% of the global electricity by 2030 and 11% in 2050. PV industry has grown over 40% in the last decade with cumulative worldwide installations estimated at 39.5 GW as of end 2010 with growth of around 70% from 2009. Europe continues to be the leading player in installations and component shipments, followed by markets of Japan, North America and China. In terms of global cumulative installed capacity, Germany leads the way with 17 GW of installations as of end 2010. This represents about 43% of the world’s total cumulative PV capacity. Italy (3.5 GW), Japan (3.3 GW) and USA (2.6 GW) follows Germany, but way behind in capacity. China is one of the front runners in emerging markets well poised to achieve 1 GW capacity by 2011.
The future PV market would be primarily driven by the needs of North America and emerging markets of Asia. Golden Sunshine program of China aims at achieving 20 GW of PV capacity by 2020, whereas India’s National Solar Mission envisages installed capacity of 22 GW by 2020. The FiT rate cuts and regulation on farm land usage is likely to shift the growth prospects outside EU countries. Outside EU, Japan, USA, China and Australia are the leading players with higher installed capacities and future growth potential. Various incentives like the investment tax Credit and ARRA funds for renewable energies are expected to boost the solar power market in USA
European Union (EU) continues to lead the world PV market with cumulative installations of around 29.3 GW as of 2010. The main drivers of growth in EU are Germany, Italy, Spain, and France. As of 2010, Germany has a cumulative installed capacity of 17GW followed by Spain (3.8 GW), Italy (3.45 GW) and France (1 GW). Spain and Germany continue to be the leading market for PV inverters with Czech Republic, Bulgaria, Portugal and Greece as emerging markets.
The demand for PV inverters were spurred mainly by the growth of PV market in EU member countries. Global inverter production has grown from 1.6 GW in 2006 to 21.4 GW in 2010 registering a CAGR of 91%. The growth has been over 150% in last year alone mainly due to high growth and near term anticipated PV installations in EU countries. As of end 2010, the PV inverter market size is valued at USD 6.6 billion doubling over the previous year. Going by the Q2’11 revised projections of major PV players; we expect the revenue to come down by 10 - 12% and our analysis predicts the market size to be around $5.5 – 5.85 billion in 2011, but with the growth momentum going, the market is expected to touch approximately $7.5 billion in size by 2015.
PV cells are semiconductor substances used for converting solar energy into electrical energy. They are of two types – mono-crystalline and multi-crystalline. PV cells are made of thin sheet of silicon called wafer.
Modules are made of a number of PV cells connected together by metallic wires to deliver right voltage and current. Normally they are covered on the front surface with glass and rear with glass or plastic sheet. This gives protection and safety to PV cells and provides enough strength for easier mounting.
Thin films use thin layers of semiconductors deposited on glass substrates to produce solar cells. They require less expensive material due to smaller size and larger deposited area. These individual solar cells are connected to produce right electric output.
Production and Shipment Trends of PV Components (Cells & Modules)
It is difficult to estimate the actual shipments because of both in-house and outsourced manufacturing practices followed by almost all companies. For example – LDK solar does contract manufacturing for other companies like Q-cell, Canadian Solar, Solarfun holdings etc. Similarly, Hanwa Solarone also does contract manufacturing for Q-cells. So the shipments reported by many of these companies are counted more than once and therefore it is hard to derive the actual industry shipments. Based on our analysis of 10 leading manufacturers capacities available in world over we expect the shipments to be in the range 29 GW in 2011 and production capacity of around 40 GW.
Based on our study, the global market growth for PV cell production capacity from 2006 – 2010 were at a CAGR of 72%. Accelerated by a booming PV market, the capacity addition grew by over 74% in 2010 alone. As PV growth is expected to decline in 2011, we expect a similar declining trend in planned capacity additions also. There would be a drastic reduction in capacity additions and as per our analysis; the growth in 2011 is predicted to be only 43%.
Micro inverters are generally used for residential and small scale commercial applications requiring < 1 MW of installations. They are 7 – 9 times more energy efficient than the conventional string and grid inverters. The MLPM (Module level power management) solutions (micro-inverter and optimizer) have other advantages like energy harvest in the range 2 – 25%, reduced planning needed during the project phase, easier to install, fire prevention and safety. Currently it is sold mostly in the North American markets of US and Canada. Enphase energy is the leader in micro inverter market with sales touching 500,000 units in 2010 and is planning to expand its foot print globally by establishing offices in Europe, which is the largest PV inverter market.
In near term, we expect the PV inverter market to touch around 27 GW by 2015 and we forecast annual supplier side inventory approximately at 3 GW. PV inverter shipments were between 8 – 8.5 GW and 20 – 21 GW respectively in 2009 and 2010 periods. This translates to a growth of around 150% in a single year. Under modest growth scenario, we expect PV inverter shipment to grow at a CAGR of 16% from 14.9 GW in 2011 to 27.3 GW in 2015. PV inverter shipments are likely to register a lower figure in 2011 at 15 GW and increase thereafter to touch 2010 levels of over 20 GW by 2014.
A high growth, policy driven PV market is unlikely to continue beyond 2010. The growth witnessed in 2008-10 period is implausible until 2015. Anticipating continued boom, many manufacturers have increased or have plans to increase their production capacity. Currently the channel inventory is estimated at 4 GW and a weaker demand in 2011-12 will down cast the surplus production capacity. We expect the capacity utilization to fall below 50% and prices drop by 30 – 40% in 2011-12. The short lull in 2011-12 will lead to market correction for a sustainable growth in future. The gross margins of many manufacturers are likely to shrink as raw materials are available in plenty accentuating a free fall in prices of all PV components.
The feedstock, Polysilicon prices have dropped from high as $450/Kg in 2008 to $54/Kg in 2011. Spur in additional capacity and excess inventory, coupled with weakening demand will lead a further downward slide to $35-40/Kg by 2012. With the free fall in prices, there is a limited option of cost cutting as European manufacturers are facing stiff competition from low cost Asian manufacturers. In future, forward integration will be the key strategy for a vast majority of European manufacturers by entering into business with PV project investors.
Thin film technologies are a promising trend with less or no consumption of raw material, Polysilicon. Though it offers many advantages of conventional crystalline silicon cells, the mass manufacturing had not picked as anticipated because of the high capital cost involved in setting up of the production facility. In the coming years, we expect more players to adopt this technology in the PV component production process. As of end 2011, we expect thin film technology to contribute around 4000 MW or 30% of the total market. The emerging PV technologies include inorganics and organic thin film technologies involving materials like Si and CiS. Both the technologies are yet to be proven in the market and are aimed at capturing the niche market of semi-conductor industry. Another revolutionary technology is the thermal photovoltaic (TPV) technologies, which is undergoing research and trials. In TPV an emitter is used to generate light and when heated up the thermal energy generated is converted to electricity.
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