As sure as the fog arrives in San Francisco in time for summer, so too does Intersolar North America sweep into town with its hordes of exhibitors, companies, scientists, policy wonks and analysts.
But the chilling effect ahead of California's biggest solar event this year isn't just from the cooling condensation billowing under the Golden Gate Bridge. Solyndra, negative price margins, presidential politics and the solar trade war with China aren't listed specifically on the agenda, but they are among the most pressing themes on the minds of the 22,000 attendees.
Chris O'Brien, head of market development at Oerlikon, the amorphous silicon thin-film solar equipment manufacturer, said: “There's a lot of nervousness and uncertainty. The headline is the rapid drop in PV module prices that's occurred over the last 24 months to this point outpaced the ability of module manufacturers to reduce costs. PV module manufacturers are reporting much lower profits than they did just two years ago.
“Profitability margins are very tight or for some players negative. But the scramble is on to try to find ways to innovate, to operate profitably at the new low prices.”
Oerlikon Solar has been insulated from the collapse in wafer-based PV modules, he said. But three of its customers – Pramac, Inventux and Gadir Solar – have filed for bankruptcy this year alone.
Oerlikon Solar’s business suffered from production overcapacity and a downturn in the global solar market, according to its 2011 annual report. Orders for its manufacturing equipment dropped 12% from 2010 to 2011 and are expected to dip further in 2012.
Its Swiss parent company, owned by Russian tycoon Viktor Vekselberg, has divested the solar division to Tokyo Electron.
But San Francisco is the home of eternal optimists who will tell you that the layer of cloud above the city doesn't indicate bad weather; it's just fog waiting to burn off.
Rock-bottom prices for wafer-based technologies might boost innovation in balance of systems and could even steer manufacturers towards cheaper thin-film technologies, said O'Brien.
Oerlikon's own technology enables production of thin film at US$0.50/w with 10.8% average efficiency, he added.
“There's an intense scramble right now to find ways to squeeze costs out of the PV module manufacturing costs to enable profitable manufacturing businesses.
“After the collapse in prices, the whole industry is going through a fundamental shift.”
China last week announced that it had revised its solar target for 2015 to 21GW to mop up some of its excess manufacturing capacity and Germany released solar feed-in tariffs higher than expected.
In the US, a GTM report projected US solar installations will rise to 3.3GW in 2012, 18% higher than previous forecasts. The US also has a healthy pipeline of 9,000MW of projects that are contracted but not yet built. And California's solar demand is likely to endure well past the expiration of the Investment Tax Credit in 2016 thanks to the state's aggressive Renewable Portfolio Standard of 33% by 2020.
Energy storage is most likely to be the sell out show this year seen as a complementary technology for PV systems for a solar industry grappling to reach grid parity and for a utility industry looking to integrate renewables on the grid.
New US regulations both at state and federal level could accelerate energy storage adoption, new technologies and applications as the grid becomes smarter and new business models are emerging to improve the economics of solar with storage.
Shalom Goffri at Navigant Consulting, who closes Tuesday's programme on future market prospects, spoke to me earlier this year about his views on where solar PV was already at grid parity in the US and globally.
Others on that same track will make the case for value VS cost in pricing solar, as another Navigant analyst, Paula Mints, did previously on a recent blog.
We'll hear exactly how close to the US$1/watt price of installed PV we are from remarks that will open the conference from Ramamoorthy Ramesh, director of the SunShot Initiative at the US Department of Energy.
At the beginning of 2012, the average price for wholesale modules was US$0.85/Wp, according to Mints, who suggests that most manufacturers are taking heavy losses and risk bankruptcy to produce at these prices.
But industry focus has turned to balance of systems and innovation, such as Advanced Solar Photonics glass-to-glass PV modules.
Meanwhile, the US solar trade war with China won't explicitly be listed on the agenda throughout the event; the Department of Commerce's preliminary ruling will be the elephant in almost every room.
Opinion is divided over the impact that the countervailing and anti-dumping duties will have on the US solar industry.
IHS’ iSuppli PV estimates the DoC's preliminary ruling could suspend Chinese imports by nearly half this year and result in the temporary removal of up to 1.5GW, or 45% of the total market in 2012.
Canadian Solar announced last month it will enter into the US utility industry. Despite its origins in Ontario and some 400MW capacity in Canada, the company is a Chinese PV manufacturer in all but name and will be impacted by the commerce decision.
Michael Potter, the company's chief financial officer, recently explained to me that the company would respond by changing its administrative process rather than business model by sourcing cells from Taiwan.
“Our business model has always been to outsource some of our cell manufacturing. In the early days of the company we made no cells ourselves so we outsourced them 100%. Today, our in-house capacity is about 75% of our module capacity.
“It's something that we can handle but we really don't think we should have to handle because we don't think this should have been an anti-dumping issue anyway.”
Potter said that it would impact costs in that it would not allow the price of solar to decline as much as in other regions.
“Longer term, because we can't use our own internal capacity or access other lower cost cells in China it will maybe have the effect of slowing down any kind of decline of prices in the US in the long run. That will hurt the industry.
“The assumption is that this won't help lower costs. It's likely to make solar more expensive.
“It means that solar prices won't be as low as they could have been a year from now and that puts the US at a disadvantage in the world.”
Most people agree, however, that the solar trade war won't boost manufacturing in the US, the subject of another panel session, PV Manufacturing in the US – A Vision for the Future.
There are few bright spots for US manufacturing, however, particularly in thin film. San Jose-based SoloPower flicks the switch on its first high volume manufacturing plant in Oregon later this summer. Backed by a Department of Energy 1705 loan worth US$197m and Oregon-state tax credits and loans, the CIGS manufacturer aims to break into international BIPV markets – Japan and Italy in particular.
If Solyndra is the ghost of Intersolar’s past and the China trade war the elephant in every room, opportunity in Japan is now the new kid on the block.
China's reported 21GW solar target for 2015 and India's 30GW potential by 2017 makes them leaders in demand in Asia. But Japan's triple disaster on 11 March 2011 could be the globalised solar industry's gain.
Japan's policy goal of 14GW of solar installed by 2015 and 28GW by 2020, stimulated by a generous US$0.52/kwh feed in tariff, could favour thin film companies. Much of that capacity will also require energy storage because of utility regulations in Japan to avoid intermittency, according to David McQuilkin of KyuMaru Pacific Alliances.
SoloPower and Oerlikon see an advantage for rooftop applications in a land-restrained country like Japan.
Oerlikon's O'Brien said, “Clearly there's a shift where the markets in Europe, which were heavily incentive-driven with FITS, are seeing much smaller market growth, even market reduction, as a result of policymaker's decisions to reduce incentive levels.
“At the same time, you're seeing new incentive programmes, for example, in Japan, China's feed in tariff that's not capped, India and a lot of activity across North Africa. The incentive levels in those markets are much lower but the energy value of in the sunbelt regions for PV is much higher.”
But to what extent Japan will open its doors to outside manufacturers remains to be seen. Japan might opt for the acquisition of foreign solar companies to grow their domestic market.
Consolidation might not be the preferred option for many companies or divisions, but it is better than collapse and could help calm industry nerves.