By: Edwin Koot (Director SolarPlaza.com)
Rotterdam, 7 November 2006
The solar energy market and industry have been experiencing a price decrease in solar modules since the second half of 2006. Based on its contacts with suppliers and the activities on the Trading Floor, SolarPlaza experienced a price fall of 10% or even more compared to just a few months ago. More and more companies are offering (large) quantities of modules. It seems as if the acute module shortage which was limiting project development has vanished. Is this just a temporary development, or could this be the start of continued price decreases? Let's look at 3 major trends in the market and their possible implications.
Considerably lower sales in Germany
The German market will consume considerably fewer modules in 2006 compared to last year. Precise figures are still not available, but everybody within this market is convinced. The feed-in tariff has decreased 5% at the start of this year. At the same time the module shortage was rising to its peak with prices rising. Simple financial calculations showed that PV installations and, moreover the larger free-field power plants, were no longer as attractive as they were the year before in 2005. Simply count the new large projects inaugurated in Germany in 2006: fewer large power plants means significantly fewer MW. The impact is accordingly: with Germany being the world's largest market, a drop of 10-15% in module sales means some 100-150 MW of modules can be sold elsewhere, and the predictions that can be heard within this market are: sales of 600 MW or even less in 2006 instead of the 730 or more in 2005.
Continued strong production growth
With the continued strong global growth in production capacity and production of cells and modules, the production of modules has risen further compared to 2005. The shortage of silicon did not seem to affect this development too much. New cell manufacturers have started production and seem to be able to obtain wafers. This must be additional quantities, since no breakdown of any cell manufacturer has been reported so far. It seems the semiconductor industry has found its way to make better profits by moving to solar wafer and cell production. In this perspective it is no coincidence that semiconductor nation Taiwan now already has 7 solar cell manufacturers. So, with more cells and modules and fewer sales in Germany, where do all the modules go?
Slow growth of module sales in rest of the world
Based on our contacts and market research, these modules do not all reach Spain and Italy. Although both very promising markets, they are not yet taking up even 100 and certainly not 150 MW of modules this year. The sales in these countries will be less than 50 MW each, related to both administrative and bureaucratic issues. The world's third market, California, is just at the beginning of a new and promising era of market growth and secondly-ranked Japan is going strong but not with any serious market growth. The conclusion is that more modules should be available on the market. And this has of course an influence on the price.
What will happen next year?
Chinese existing and new manufacturers are ramping up production capacity in cells and modules. More silicon is expected to be produced next year in the world, specifically in China. Which markets will consume these silicon, wafers, cells and finally modules? Not Germany it seems. The feed-in tariff will be decreased another 5% as regulated by law. Furthermore, a revision of the German feed-in tariff is planned in 2007. Therefore, the German market can only become attractive again with much lower module prices. At least another 10% less seems necessary to create market opportunities for solar systems bringing an acceptable financial yield for investors. Without a price decrease this market will only shrink once more. One way to stimulate the growth of module sales for the industry would be a significant sales price decrease. Other indicators could enhance this development as well. There are already more than 70 cell and more than 230 module manufacturers in the world. The larger and stock-listed producers will have to show their shareholders growing numbers for sales and market shares. And as other markets have shown: if you can't sell more, you either lower prices to increase sales or you buy other companies out of the market. Both of these developments can put a serious pressure on the market prices. Small companies will have to make serious efforts to keep up with the larger corporations. The question is whether these companies will be able to get their hands on cheap wafers and cells or whether they will have the financial resources to lower their prices and margins to go along with the market.And there is another visible trend which is putting pressure on the smaller manufacturers. The growing attention for product quality and (financial) reliability and sustainability of PV companies. Like the Huerta Solares projects in Spain, more and more large multi-megawatt PV projects are being developed. In this price-unstable market, the developers purchasing modules not only want to do business with companies offering the lowest prices, they also want to be sure that the seller will still be there in 10 years to fulfil product warranties.
Further price decrease after 2007
Will the smaller cell and module manufacturers be able to survive price decreases after years of heavy investment? Will this be the beginning of a consolidation phase? The enormous growth speed of the bigger manufacturers will definitely require maximum efforts by the smaller ones to keep up within this unstable market. They could become fodder for the larger companies to strengthen their local market positions or, even worse, break down if prices fall faster and margins melt like snow in the sun. And prices could fall further after 2007. The new silicon production capacity currently being built could bring considerably more solar-grade silicon on the market after 2007. That means that, finally, the enormous surplus of cell and module production capacity can be used. This could lead to further price decreases since it is not unthinkable that the global market growth will not be high the coming 2 years.
Modest market grow in 2007
It is uncertain what will happen with the feed-in tariff in Germany with a revision coming up in 2007. If continued as it is now, the growth will depend very much on the required lower module prices to pump up this market again. Japan is growing modestly and an explosive growth does not seem likely in the coming year. The world's third market, California, is very promising with its new incentives, but has only just started. Experience in other markets shows that it takes time to educate a market before really big sales numbers can be achieved. Look for example at Spain and Italy. Already in action with good incentives for over 1 year, they could start growing seriously, but are currently showing some uncertainties related to revisions of the feed-in tariff. Many other new markets might pop up (France, Canada, Greece), but they will not be able to consume big numbers of megawatts in their early years of development. Therefore, for the long term, the global market development looks great.
Consolidation seems likely within the coming years
Based on the above scenario, in the short term a consolidation within the supply chain could take place. Would it matter if the 'big guys' with access to large amounts of capital take over some 'smaller guys'? With continued price decreases achieved by large-scale and optimized production, solar modules will become more and more a commodity product. Therefore, in the end, concentration and consolidation in the supply chain will have a positive effect on market prices and therefore competitiveness of PV with other energy sources. And that is what all stakeholders want to achieve, because then the markets and business opportunities will really take off for PV. In the development of the solar energy market and industry, the current market phase could be the start of a new era in the development of photovoltaic energy as a major energy source. As foreseen by several industry experts, photovoltaic energy systems could even become a price-competitive energy source within the next decade.
Chinese solar industry dominance?
Within this consolidation phase, the Chinese manufacturers have an interesting advantage. As with other products (toys, computers, cars, etc.), the Chinese manufacturing industry seems to be very competitive compared to industries in western countries. Moreover, western multinationals have build up their manufacturing facilities in China, most often in joint ventures with Chinese companies. Government incentives, tax advantages, cheaper labour, plenty of capital, enormous numbers of highly educated people, and a culture and spirit to work harder and longer, provide competitive advantages that are hard to beat. Their strongly growing energy consumption and programs to stimulate domestic use of renewable energies will further enhance the Chinese solar industry. All these developments make it worthwhile to keep a close watch on what will happen in the Chinese PV industry over the coming years.
The solar industry seems to be at a turning point in its development. Global production capacity is rapidly growing and shortages in the supply chain are vanishing. Prices are decreasing again, turning the market from a sellers market into a buyers market again. The expected consolidation phase could create a good starting position for a new era heading towards solar energy as a price-competitive renewable energy source.
Thursday, May 17, 2007
China's solar energy electricity cost expected to equal to conventional one by 2010
27 November 2006 Xinhua News Agency
NANJING - With the continued fall in solar cell cost, the cost of electricity generated from solar energy is expected to drop to less than one US dollar/kWh in China by 2010, reaching or approaching to that of conventional power, predicted Zhang Yaoming, academician of Chinese Academy of Engineering Sciences on an international seminar held here on Nov. 17.
Now, the cost is 10-75 yuan/kWh in China.
Thanks to the drastic progress in technologies, the output of solar cells has increased by degree, and the cost of its components decreased by a big margin.
According the academician, the cost of solar energy-generating electricity was as high as 200 yuan/kWh in China in 1977; and plunged to 40-45 yuan/kWh in 1980s when China's photovoltaic industry just started out. At the end of 2000, the cost of electricity generated from mono-crystalline silicon solar cell was 42-47 yuan/kWh, that of non-crystalline silicon solar cell, 23-25 yuan/kWh.
As the solar cell price declines all the way worldwide, the prices of thermal power and hydraulic power are rising due to the exhaustion of fuels, environmental pollution and transport fee of raw materials. By 2020 when the cost dives to 6 US cents/kWh, solar energy-based electricity will be fully of economic base and commercial value to replace the oil-fuelled electricity, Zhang stated.
NANJING - With the continued fall in solar cell cost, the cost of electricity generated from solar energy is expected to drop to less than one US dollar/kWh in China by 2010, reaching or approaching to that of conventional power, predicted Zhang Yaoming, academician of Chinese Academy of Engineering Sciences on an international seminar held here on Nov. 17.
Now, the cost is 10-75 yuan/kWh in China.
Thanks to the drastic progress in technologies, the output of solar cells has increased by degree, and the cost of its components decreased by a big margin.
According the academician, the cost of solar energy-generating electricity was as high as 200 yuan/kWh in China in 1977; and plunged to 40-45 yuan/kWh in 1980s when China's photovoltaic industry just started out. At the end of 2000, the cost of electricity generated from mono-crystalline silicon solar cell was 42-47 yuan/kWh, that of non-crystalline silicon solar cell, 23-25 yuan/kWh.
As the solar cell price declines all the way worldwide, the prices of thermal power and hydraulic power are rising due to the exhaustion of fuels, environmental pollution and transport fee of raw materials. By 2020 when the cost dives to 6 US cents/kWh, solar energy-based electricity will be fully of economic base and commercial value to replace the oil-fuelled electricity, Zhang stated.
Polycrystalline Silicon Production Capacity in China
At present there are only 3 major companies in China that are able to produce polycrystalline silicon in volume, and they are Luoyang China Silicon (300 Ton), Sichuan Emei Semiconductor(200 Ton), and Sichuan Xinguang Silicon (1260 Ton). And all of these companies are planning to increase their production capacity now. What's more, there are many polycrystalline silicon projects are under construction or planned in China, take all the polycrystalline silicon projects in account, the total production capacity is over 20,000 Ton already.
It is expected that in 2010, the supply of polycrystalline silicon will surpass the demand, and the price of polycrystalline silicon will be reduced, then the solar electricity will be much cheaper, and much popular.
It is expected that in 2010, the supply of polycrystalline silicon will surpass the demand, and the price of polycrystalline silicon will be reduced, then the solar electricity will be much cheaper, and much popular.
Wednesday, May 16, 2007
Thin-film Solar Cells to Clobber Fossil Fuels Within Ten Years
Naveen,Shimla, INDIA Feb 21 2007, 5:03 am GMT
Now, cheap solar power is poised to chip away at the gas and oil by half. I need not mention that electric efficacy is looking at the solar revolution in apprehension. Every nation seems to be very conscious about generating electricity from the solar power.
Anil Sethi, the chief executive of Swiss company Flisom that develops thin-film solar cells said anticipates that the day is not far when all the cities in America and Europe will be fulfilling their heating, lighting and air-conditioning needs from solar films. He further expects that within five years from now, solar power will be cheap enough to race with carbon-generated electricity and within the next 10 years, solar power will undercut coal, natural gas, and nuclear by 50 percent. The process is technically dubbed clobbering.
The thin film solar technology is based on copper indium gallium selenide (CIGS) that is assembled on a lithe backing making it fit to be used by the sides of a building, cell phones, laptops, vehicles, and clothing. The company expects the thin-film solar panels to be available in late 2009 reaching up to $0.80 per watt in five years, and then $.50 per watt within ten years.
Now, cheap solar power is poised to chip away at the gas and oil by half. I need not mention that electric efficacy is looking at the solar revolution in apprehension. Every nation seems to be very conscious about generating electricity from the solar power.
Anil Sethi, the chief executive of Swiss company Flisom that develops thin-film solar cells said anticipates that the day is not far when all the cities in America and Europe will be fulfilling their heating, lighting and air-conditioning needs from solar films. He further expects that within five years from now, solar power will be cheap enough to race with carbon-generated electricity and within the next 10 years, solar power will undercut coal, natural gas, and nuclear by 50 percent. The process is technically dubbed clobbering.
The thin film solar technology is based on copper indium gallium selenide (CIGS) that is assembled on a lithe backing making it fit to be used by the sides of a building, cell phones, laptops, vehicles, and clothing. The company expects the thin-film solar panels to be available in late 2009 reaching up to $0.80 per watt in five years, and then $.50 per watt within ten years.
A Cloudy Offer From A Chinese Solar Entrepreneur
To get rich is glorious in China nowadays. Scientists are no exception.
A top home-grown inventor, 41-year-old Ma Xin, is currently engineering a reverse takeover of a small Singapore-listed investment company, Rowsley, in a deal worth 2.7 billion Singapore dollars ($1.6 billion) that would bring a small part of his high-tech corporate empire, Sinocome Group, to the international capital markets.
Ma is conducting the takeover through an obscure solar panel production company called Perfect Field that he founded last year.
Ma says the company will be a disruptive player in the energy field, with technology that is competitive with coal power — without any government subsidies.
However, the offer has caused unease among some Singaporean investors. Perfect Field has not yet sold any solar panels — it hasn't even finished building a factory. It's booked a mere 28 million yuan in revenue ($3.6 million) for consultancy work.
Yet Ma is guaranteeing Rowsley investors $300 million a year in profits for the three fiscal years through June 30, 2010. If he does not deliver, he has agreed to forfeit the 92% stake in Rowsley he would receive under the deal.
Ma became well-known in China when he was appointed chief public security adviser to the 2008 Beijing Olympics Games, a role that he secured mainly on the strength of developing China's first computerized facial recognition security system. His company claims the technology is about two years ahead of comparable devices in the U.S. and Europe. His system will be used in the 2008 Beijing Olympics.
Sinocome's success in commercializing its facial recognition technology in a range of applications has made Xin wealthy. The company claimed sales of 5 billion yuan ($646 million) in 2006 of facial recognition products.
Founded in 1996, Beijing-based Sinocome does not seem to be in need of financing, as most of its interests in more than 30 affiliated companies receive financial support from Chinese governments at different levels through joint ventures.
However, Sinocome says that Perfect Field is one of very few of its subsidiaries that is fully owned and does not receive backing from the government, which is why it is seeking to tap the international equity markets through a reverse takeover.
Under the deal, Rowsley would buy Perfect Field for $1.6 billion and issue Ma shares that would give him a 92% stake in the Singaporean company.
Ma plans for Perfect Field to churn out photovoltaic solar cells based on amorphous silicon technology, a second-generation technique that requires only a thin film of silicon on a glass substrate, making it substantially cheaper to produce than the prevalent, thicker crystalline silicon technology.
Most Chinese solar panel companies, including industry leader Suntech Power, make crystalline silicon solar cells.
The rap on amorphous silicon has been that it is less efficient at collecting solar energy, requiring a larger surface area than crystalline panels. However, Ma claims that Perfect Field has raised the efficiency of its panels to near that of crystalline silicon.
Perfect Field plans to achieve a production capacity of 100 megawatts in 2007 and 500 MW by 2009.
While the venture appears speculative, Rowsley's current investments, which include interests in a paper recycler and a ceramic tile maker, are pedestrian compared to the potential of the red-hot alternative energy sector.
Described by an employee as reticent and polite, Ma honed his teeth at China's two most influential scientific institutions, obtaining his PhD from the Chinese Academy of Science and doing post-doctoral work at Beijing Tsinghua University, the alma mater of most of its current leaders, including current President Hu Jintao.
He continues to play an instrumental role in research and development and is said to leave the business side largely to professional managers.
He is active politically, serving as a consultant for the mayor of Beijing and a member of the Science and Technology Committee of the Military Command Association of the People's Liberation Army, as well as the Standards Committee of the Ministry of Public Security.
Sinocome says on its Web site that it has total production assets worth 4 billion yuan ($517 million) and its trademark value estimated at 1 billion yuan ($129 million), but a company manager said these figures were posted before Morgan Stanley appraised its fast-growing solar energy production center in Jilin last year to be worth close to $4.8 billion.
Perfect Field is just the latest solar energy venture for Sinocome, which started in 2000 with the production of solar-powered street lamps and has recently won Chinese foreign aid contracts in such African countries as Kenya and Uganda.
Its solar energy products have also found markets in Peru, Costa Rica, Mexico and Venezuela.
Groupwide, Sinocome says it intends to expand its production capacity for solar panels to nearly 2000 megawatts in the next three years, which would transform it into an industry leader.
To help with its international expansion, Ma has retained American marketing guru Philip Kotler as a consultant.
Sinocome says that its solar panels will be incorporated in the Beijing Olympic stadium, dubbed the "Nest."
A top home-grown inventor, 41-year-old Ma Xin, is currently engineering a reverse takeover of a small Singapore-listed investment company, Rowsley, in a deal worth 2.7 billion Singapore dollars ($1.6 billion) that would bring a small part of his high-tech corporate empire, Sinocome Group, to the international capital markets.
Ma is conducting the takeover through an obscure solar panel production company called Perfect Field that he founded last year.
Ma says the company will be a disruptive player in the energy field, with technology that is competitive with coal power — without any government subsidies.
However, the offer has caused unease among some Singaporean investors. Perfect Field has not yet sold any solar panels — it hasn't even finished building a factory. It's booked a mere 28 million yuan in revenue ($3.6 million) for consultancy work.
Yet Ma is guaranteeing Rowsley investors $300 million a year in profits for the three fiscal years through June 30, 2010. If he does not deliver, he has agreed to forfeit the 92% stake in Rowsley he would receive under the deal.
Ma became well-known in China when he was appointed chief public security adviser to the 2008 Beijing Olympics Games, a role that he secured mainly on the strength of developing China's first computerized facial recognition security system. His company claims the technology is about two years ahead of comparable devices in the U.S. and Europe. His system will be used in the 2008 Beijing Olympics.
Sinocome's success in commercializing its facial recognition technology in a range of applications has made Xin wealthy. The company claimed sales of 5 billion yuan ($646 million) in 2006 of facial recognition products.
Founded in 1996, Beijing-based Sinocome does not seem to be in need of financing, as most of its interests in more than 30 affiliated companies receive financial support from Chinese governments at different levels through joint ventures.
However, Sinocome says that Perfect Field is one of very few of its subsidiaries that is fully owned and does not receive backing from the government, which is why it is seeking to tap the international equity markets through a reverse takeover.
Under the deal, Rowsley would buy Perfect Field for $1.6 billion and issue Ma shares that would give him a 92% stake in the Singaporean company.
Ma plans for Perfect Field to churn out photovoltaic solar cells based on amorphous silicon technology, a second-generation technique that requires only a thin film of silicon on a glass substrate, making it substantially cheaper to produce than the prevalent, thicker crystalline silicon technology.
Most Chinese solar panel companies, including industry leader Suntech Power, make crystalline silicon solar cells.
The rap on amorphous silicon has been that it is less efficient at collecting solar energy, requiring a larger surface area than crystalline panels. However, Ma claims that Perfect Field has raised the efficiency of its panels to near that of crystalline silicon.
Perfect Field plans to achieve a production capacity of 100 megawatts in 2007 and 500 MW by 2009.
While the venture appears speculative, Rowsley's current investments, which include interests in a paper recycler and a ceramic tile maker, are pedestrian compared to the potential of the red-hot alternative energy sector.
Described by an employee as reticent and polite, Ma honed his teeth at China's two most influential scientific institutions, obtaining his PhD from the Chinese Academy of Science and doing post-doctoral work at Beijing Tsinghua University, the alma mater of most of its current leaders, including current President Hu Jintao.
He continues to play an instrumental role in research and development and is said to leave the business side largely to professional managers.
He is active politically, serving as a consultant for the mayor of Beijing and a member of the Science and Technology Committee of the Military Command Association of the People's Liberation Army, as well as the Standards Committee of the Ministry of Public Security.
Sinocome says on its Web site that it has total production assets worth 4 billion yuan ($517 million) and its trademark value estimated at 1 billion yuan ($129 million), but a company manager said these figures were posted before Morgan Stanley appraised its fast-growing solar energy production center in Jilin last year to be worth close to $4.8 billion.
Perfect Field is just the latest solar energy venture for Sinocome, which started in 2000 with the production of solar-powered street lamps and has recently won Chinese foreign aid contracts in such African countries as Kenya and Uganda.
Its solar energy products have also found markets in Peru, Costa Rica, Mexico and Venezuela.
Groupwide, Sinocome says it intends to expand its production capacity for solar panels to nearly 2000 megawatts in the next three years, which would transform it into an industry leader.
To help with its international expansion, Ma has retained American marketing guru Philip Kotler as a consultant.
Sinocome says that its solar panels will be incorporated in the Beijing Olympic stadium, dubbed the "Nest."
Subscribe to:
Posts (Atom)
