Shyam Mehta will take part in the plenary panel discussion taking place during the Solar Future DE Conference on the 8th of June.
Considering his experience as a Senior Analyst at GTM Research, we were happy to be able to interview Mr. Mehta about his view on the US and global PV market and its developments in the coming years.
What are your expectations for the US and global PV market in 2010 to 2013?
It's great that you asked - we've just completed a comprehensive reconciliation of global supply and demand through 2013. Regarding the global market, we expect global demand of 11.3 GW in 2010 - so growth of 60% over 2009, driven mainly by the bumper first half that Germany is experiencing, as well as Italy. Once the German feed-in tariff cuts kick in, though, life will be difficult. We see only 11% growth in 2011. Past that, we expect higher but more steady growth in 2012 and 2013 - around 20% each year, as other markets step in to fill the void that Germany leaves. In 2013, we expect demand to be around 17 GW.
Regarding the U.S., the first thing to understand is that there is no such thing as the "U.S.market" - rather, it is a collection of 50 individual markets, each with their own regulatory frameworks and incentive structures. While this means that the U.S. will never be able to exhibit the kind of rampant growth that we saw in Spain in 2008 and Germany in 2009, it also means there is less dependence on any one incentive, as is the case in feed-in tariff markets. We are quite optimistic about the future of the U.S. market - particular the utility-scale market - despite the well-documented obstacles (regulatory bottlenecks, cost pressure). There is a significant number of utility-scale projects in the pipeline - based on our estimates, we expect demand of 833 MW, growing to over 2.8 GW by 2013 - only Germany will be bigger.
What module price development do you expect in this and next year? Will the ASP for c-Si modules hit €1/Wp in 2011?
We expect a mid-year global blended crystalline silicon module price of US $1.68/W for 2010. Because of the FIT cuts in Germany, there is almost certainly going to be significant downward pressure on prices in the second half of the year. For 2011, our mid-year price estimate is around $1.40/W - which means we will almost certainly see prices of €1/Wp in 2011. With supply and demand equilibrating past 2011, we expect module price drops to return to long-term historical averages (5-10%) in 2012 and 2013.
Is there enough room for further cost and price reduction in c-Si to compete with thin-film and/or new technologies in the long run? Or will thin-film become the dominant PV technology in the coming decade?
I am a little surprised by how your question is framed! I would say that with the notable exception of First Solar, the pressure is most certainly on thin-film manufacturers right now - c-Si has seen dramatic cost drops over the last year, both on the polysilicon and conversion cost fronts. Chinese manufacturers such as Trina and Yingli should have an all-in production cost of around $1.10/W by the end of 2010 - on an efficiency-adjusted basis, that is hard to beat. Most thin-film companies are playing catch-up with Asian c-Si and First Solar right now - and a lot of these firms will lose the race between profitability and solvency. That said, the successful firms (First Solar, Sharp, Showa Shell, Trony) - should experience non-linear reduction in cost and expansion in capacity, and we do expect these firms to leap-frog European c-Si production - driving a steady increase in thin-film market share over the next four years, from 23% in 2009, to 30% in 2013. But c-Si (more specifically, Asian c-Si) is in pretty strong shape right now.
What, to your opinion, could be the potential impact and for which companies specially, if the German Government seriously intends to decrease or even stop the FIT for ground-based PV systems?
Well, obviously this would not be good news for producers and developers whose business is tied to ground-mount systems in Germany, such as First Solar, that has a large market share in this arena. Of course, a lot will depend on the specifics - a marginal decrease in the FIT will not be damaging, but a sharp reduction or removal would make things difficult for a while. But we have seen evidence that these firms are making every effort to reduce their exposure to this segment in the event such a scenario actualizes. No smart company is going to have a high percentage of its business tied into any one FIT-driven segment - hence First Solar's attempts to grow their utility-scale project development business so aggressively in the U.S.
What is your view of the recent announcements by the Chinese government that they will provide huge and attractive loans to some Chinese manufacturers so that they can grow their businesses? Can we still refer to a 'level playing field' in the global solar industry?
I'm not sure the playing field is level even right now - the Chinese manufacturers have been receiving hefty loans from Chinese banks for quite a while, and the banks have been quite happy to extend most of these lines of credit - these are what we analysts refer to as "implicit" or "embedded" subsidies. So I'm afraid this has really tilted competitiveness heavily in favor of the Chinese vis-a-vis European manufacturers - labor costs are really not much of an issue in PV manufacturing. It's difficult to compete with a zero cost of debt and highly subsidized utility rates.
What is your vision regarding the numerous manufacturers still entering the PV business? How will the solar industry look in five years’ time? Isn't the solar industry likely to follow the wind-energy industry in the near future, with more than 90% of the market shared among only ten major manufacturers?
Well, I would say the industry is fairly consolidated right now - the top 12 module manufacturers (in a market of over 150) were responsible for 50% of global production in 2009. Over time, yes, I expect further consolidation, which is natural for a still-maturing industry like PV - there are too many producers in the market now and many of them are not competitive. At the same time, I don't see consolidation to the degree witnessed in the wind industry, certainly not in 5 years - consolidation is very much a function of commoditization, and there is still a lot of room for technological innovation in PV. I can point to at least 40 companies that will be around in the next 5 years.
How can solar PV compete with concentrated solar power plants in utility-scale PV projects in potential markets such as the USA, India, Spain, China, and elsewhere?
PV has a number of well-established advantages over CSP - it is modular, which means you can build and operate projects in small chunks, as opposed to CSP, where the outcome is binary - you're sending 100 people out into the desert for 5 years, not knowing exactly how things are going to turn out. So there is less risk from an investment and construction standpoint. Secondly, CSP needs a transmission buildout to get the power from the generation site (desert) to load centers (cities) - this is expensive and laden with regulatory complexity. Thirdly, there are environmental factors that come into play, like desert habitat stability and water usage issues for wet-cooling CSP systems. CSP may have made sense pre-2009, when PV modules were $4/W, but with prices less than half that, it has really tilted the balance in favor of PV. That said, there will always be locations and situations where CSP makes economic sense.
What do you see as the major trends and drivers for solar energy in the coming decade?
A decade is a long time in such a dynamic and complex industry! I think it is safe to say that the solar world in 2020 will be vastly different from the one that we see today. Three trends I would point to are increasing utility ownership of PV generation assets, especially in the U.S., the end of PV's historical dependence on "champion" markets like Germany as demand diffuses to a number of secondary markets, and the rise of CIGS as a viable technology. As a supply-side analyst, I'm particularly interested in the last of these - there has been a lot of skepticism about CIGS expressed by various quarters of the industry, but I'm confident and hopeful that at least a few companies will be able to turn all the hype into reality over the next 3 years.
