Desperate times call for desperate measures, according to the latest PV industry analysis from NPD Solarbuzz. According to the market research firm, tier 1 PV manufacturers are set to align on one technology roadmap in 2013 and beyond to combat overcapacity and support aggressive cost reductions.
Talk of a single technology roadmap within the PV industry wasn’t on the agenda when the industry was capacity constraint and ramping to multi-gigawatt levels. Fast forward a few years and massive overcapacity has spawned a period of profitless prosperity and debates over how the industry can survive. Within this landscape, several PV technology roadmaps have appeared to tackle cost reductions and improve conversion efficiencies.
However, as recently covered by NPD Solarbuzz analysts in guest blogs at PV-Tech, any meaningful roadmap has been driven by those with money to spend and those leading the technology race, though not necessarily either profitable or successful in gaining market share.
“Previously, the PV industry was pursuing a wide range of manufacturing technologies across different c-Si and thin-film types,” noted Ray Lian, Analyst at NPD Solarbuzz. “This created significant challenges for PV equipment suppliers, as they were unsure which customers would survive for repeat business. However, the current manufacturing shakeout is playing a pivotal role in filtering out uncompetitive technologies from the industry.”
The lack of a single technology roadmap, akin to that followed in the semiconductor industry, known as the ITRS, the lack of a single focused roadmap in the PV industry has contributed to the industry's failing to have reached cell conversion efficiencies of around 20% across tier 1 manufacturers.
NPD Solarbuzz contests that only 15% of cells produced by tier 1 manufacturers are rated at 18% or higher. Under a unified roadmap, figures would climb rapidly and ensure 75% of tier 1 cell capacity would be classified high efficiency by the end of 2015.
This would not only support cost reductions that could outpace price declines but eliminate much of the industry overcapacity that lies with lower-tier producers. These producers contain less capability to migrate to higher cell efficiencies and would make this move at a slower pace, rendering them uncompetitive.
The market research firm believes the current solar shakeout could reduce the number of cell and thin-film manufacturers from almost 400 in 2011 to less than 100 by 2016.
This would result in over 60% of cell production residing with the top 20 manufacturers of modules. Only 13 manufacturers within the thin-film sector would have production exceeding 100MW by 2016.
However, the key question has been when a technology buy cycle would occur to support greater industry effort to support the elimination of much of the overcapacity.
“With PV CapEx in 2012 confined to maintenance-only levels, the short-term emphasis has turned firmly to cost reduction to restore corporate profitability,” added Lian. “By mid-2013 however, silicon and non-silicon costs will have reached record lows. At this stage, the tier 1 c-Si leaders will be able to focus collectively on formulating a new PV technology roadmap.”
Apparently, that’s not enough to get the industry spending on new equipment as the market research firm is also concerned about the multi-gigawatts of uninstalled tools purchased during the over-spending in 2010 and 2011 but have yet to be installed due to the start of plummeting prices due to overcapacity.
According to NPD Solarbuzz, this equipment need to be cannibalized by upgrading to higher efficiencies to get them sold through and contributing to the next buy cycle.
Yet equipment suppliers already established in the market need to be aware of a potential wave of new competitors entering the market, touting high-efficiency tools.
The market research firm noted that historically, c-Si cell deposition tools have commanded the highest ASPs and offered the greatest served addressable market for c-Si PV equipment suppliers. Dominated today by Centrotherm and Roth & Rau (now a subsidiary of Meyer Burger), the market for c-Si PECVD tools reached US$880 million in 2011.
However, with PV thin-film deposition equipment an unattractive segment to target in the near term, a number of tool suppliers are likely to contest the c-Si deposition market as soon as 2014 onwards.
“It is not just that the tool types are set to change when PV spending restarts, but also that market share will shift among the suppliers. The first key deliverable will be to fully understand the timing and content of the PV technology roadmap that will emerge next year from tier 1 c-Si producers,” added Lian.
Without a technology buy cycle, a capacity buy cycle would be extended by several years, seriously undermining equipment companies that have been focused almost exclusively on the PV industry.
With the weak environment forecasted to continue during 2012 and into the first half of 2013, only a limited number of new capacity additions in Taiwan (c-Si cell lines) and Japan (c-Si module lines) are expected.
Collective efforts in implementing a new PV technology roadmap could support a faster and greater elimination of current overcapacity and support the end of a destructive period of profitless prosperity the PV industry has never experienced before.