Global information company IHS has surveyed the engineering, procurement and construction (EPC) landscape to find mid-size EPC companies are struggling to meet tight margins, despite an impressive pipeline, as consolidation in the sector continues.
The 30 largest EPC companies accounted for 30% of the non-residential global PV market for 2013, a 5% increase on last year.
The non-residential PV market grew by 20% during 2013, led by the US and China. Despite the boom and an impressive 1.2GW pipeline, UK EPC firms still struggled.
Some companies in other markets multiplied the size of their non-residential PV market share. US firm First Solar came in top of the league, doubling its capacity to reach 1.1GW.
China-based TBEA Sun Oasis came in second with 1GW after quadrupling its installed capacity in non residential PV.
China and the US accounted for nine of the top ten EPC companies listed by IHS.
China and the US’s deployment of large pipelines accounted for “notable growth last year" according to Josefin Berg, senior analyst for solar demand at IHS.
There is 2.5GW of non-residential PV under construction in the US, and 2.1GW in the pipeline for China.
The global pipeline for non-residential PV stands at 114GW, with more than 10,000 projects – of which 10GW is under construction and 10GW has signed PPAs.
Berg said major challenges in completing projects include obtaining finance and tumultuous government policies – that can make finance difficult to secure even after paperwork has been signed and permits granted.
The UK has a predicted pipeline of 1.2GW in non-residential PV, but EPC companies are still struggling to make ends meet.
IHS said that UK EPCs were burdened as the primary financial risk taker and faced tight profit margins. According to the report EPCs in the UK have to pay up front, wait, and hope for the government Renewable Obligation Certificates (ROC) to be awarded – which can take six months after the project's completion.
“This long process put system integrators at risk of running out of cash before the project is sold and paid for,” said Berg. “Consequently, the most successful EPC companies building PV plants in the UK are either backed by venture capital, or form part of larger construction groups.”