There are few original ideas for new technologies, products and/or services.  Most of what is termed new is a mutation of an idea, which itself is a mutation of an idea all the way back to the original discovery or light bulb moment.  Basically, there is not much that is new, or, put another way, that deserves to be called new. For example, every time a company releases a new smart phone design it is releasing an update of an update on top of an update with the original being a marriage between a computer and telephone (the quaint these days landline).

In the solar industry modules with more cells (72+) are not new, shingles and tiles are not new, smart modules are not new.  All are form factor advancements (or not) based on ideas that are decades old and that trace back to the discovery of the photovoltaic effect by physicist Alexander Edmond Becquerel in 1839.

Technologies/products/services rise from the community of ideas all starting somewhere and building on each other.  Everything else is marketing.

Even Everett M Rogers Diffusion of Innovations model, on which many a marketing plan is based, has its roots in the research of Iowa State University sociologists Bryce Ryan and Neal Gross who in 1943 studied the adoption of hybrid seed corn by Iowa farmers.  Marketing managers everywhere owe a debt of thanks to Dr. Ryan and Dr. Gross and everyone owes a debt of thanks to Adam Smith, who owes a debt of thanks to many others.

The adoption curve offers a base for understanding how individuals within a market may – and only may – behave.  The marketplace is a complex arena filled with competing interests and motivations and overrun with noise – announcements, articles that are really marketing instruments and other attempts to grab and influence consumer attention end up confusing the landscape. Think of it as a daycare center with 20 four-year-old children vying for attention and then multiply this by 1000.

In terms of the solar industry, many people do not own their own roof so cannot be an innovator, early adopter, early or late majority or a laggard until a business model or societal change comes along to allow them to participate. The community solar business model has people who do not own their own roof and who are early adopters in their hearts to, well, adopt.

New sells even when it is not new

The solar industry is not really inundated by new ideas and it is overrun with announcements about things that are not particularly new and by hyped trends that are more trope than trend.

Solar is also a highly innovative industry where ideas ebb and flow, and science and engineering articulates, improves, designs and where the community of ideas thrives.

For example, PERC PV cell technology (passivated emitter rear contact) is not a new idea.  PERC was developed two decades ago and is now crawling through its adoption cycle whatever that cycle may be. In terms of PERC, end users and other module buyers are not on its adoption curve – cell and module manufacturers are on the PERC adoption curve and this adoption curve relates more directly to the work of Ryan and Gross at Iowa State University than it does to Rogers’ Diffusion of Innovation model though, they are related. This is because the Diffusion of Innovation model is most relevant to consumers (end users) and the work of Ryan and Gross is most relevant to producers.

Back to Adoption

Consumers of electricity do not fall easily into the Diffusion of Innovation model. This is because solar is a need and consumers (in most cases) rent their electricity from a utility.

Consumers of solar generated electricity also do not fall easily into the Diffusion of Innovation model. Reasons for this are: for the residential model, the end user needs an appropriate roof or adjacent land, needs to own the roof or adjacent land, and there must be no other roadblocks to adoption. For example, a communal roof (condo complexes) is a barrier to adoption.

Affordability is a barrier to adoption.  The residential solar lease ameliorated (to an extent) the affordability barrier but did so only if the homeowner qualified for the lease.  The residential solar lease is also, in general, more expensive long term than system ownership.

The point is that while a person might want to be an innovator or early adopter of a solar PV system, it may not be possible for them to adopt.  That is, someone can be an innovator and an early adopter in his/her heart and at the same time be unable to act on their early-adopter nature.

Into the Fray a Trend Lifecycle Model

Models provide useful guides for entering highly complex markets and rigid adherence to any model will often prove frustrating.  That is … models behave only as well as the inputs to them and users need to be willing to adjust.

Trends – any trend – begin with an idea, either an original idea or a mutation of another idea.  Original ideas are, as previously noted, extremely rare, are unique and should be nurtured and treasured if only for all the mutant ideas the original will spawn.

The following is a Trend Lifecycle Model, useful for anyone looking to enter the complex, confounding, thrilling, sometimes agonizing solar industry.

  1. Idea, original or a mutation of another idea
    1. Someone, somewhere has a notion and takes the time to think the idea through and develop a commercial concept
  2. Pioneering the market
    1. An attempt to find interest (money, sales) is bravely (and this is truly brave) made as the new company ventures into an area that is either completely different or just different enough
  3. Social Media climbing
    1. The idea catches social media interest primarily through smart marketing and often through the unfortunate use of announcements. It is worth noting here that some announcements are just to create awareness and are not really announcing anything
  4. Word of mouth frenzy
    1. Twitter, Instagram, et al catch on and the idea officially begins to trend. This often happens whether or not the idea (now a trend) is actually viable – if nothing else at least some excitement trends
  5. Copycats enter
    1. Rapidly or not so rapidly depending on whether the trend is hardware or software and where it is in its development timeline and how easy it is to copy – copycats enter. At this point Twitter, Instagram, all online magazines and conferences are inundated
  6. Blanketing the market
    1. The market noise level is deafening
    2. At this point much depends on product differentiation and who reaches the market first
    3. Conferences catch on to the trend and shift content to it
  7. Market attention deficit
    1. Too many products/services of the same type are launching announcements also of the same type and hype accelerates
    2. The market is highly confused and its attention wanders
    3. Market boredom sets in
    4. Twitter, Instagram, et all see a decline of interest in the trend
  8. Revenue potholes
    1. Price becomes the tipping point and depending on the product, competitors begin undercutting each other
    2. Margins fall and yet all entrants claim success
  9. Trend fadeout
    1. The market yawns and turns elsewhere
    2. Twitter, Instagram, et al, abandon the trend – more or less, essentially Twitter, Instagram, et al bookmark the trend and will return to it to either announce its return to viability or ask why it was ever a thing at all
  10. Survival of the best funded or most well-thought out or the future direction or most stubborn or all of the above
    1. Products/technologies/services that serve a need and/or push progress forward survive as long as the company has the money to do so

Concerning number ten, the solar PV industry is not necessarily the best funded but its funding never seems to completely dry up, it is a long lived highly technical industry filled with innovations and innovators all building on each other, it is the future direction and it is also most stubborn.  Solar is not a trend and it will survive.

 

 

Every year on August 13 I say goodbye to my brother again. He was killed on this day in 2004 a little after midnight as he rode his Harley on the SoCal freeways. He was on his first vacation following his wife’s death from cancer two years previously. He was coming home from visiting a friend, rode up an incline and around a dark curve right into the back of an abandoned SUV.

It probably took him a few minutes to die. I imagine him lying in the gravel on the side of the road thinking about his daughter, or, maybe not. I imagine him in great pain, but maybe not. The point is that imagining his last moments is all I have left of him – it was suddenly, all I had left of him.

My life is filled with abrupt goodbyes. The call from the county coroner after my mother was murdered; the call from my cousin when my uncle Bob, my father’s identical twin, was killed after driving onto the railroad tracks and the call from my stepmother that my father was in a coma from which he would never wake up.

But the call from my eighteen year old niece on August 13, 2004 at 2AM after she arrived home from her first job at a pizza parlor to find the coroner on her porch was the worst call of them all.

And I expected it. You cannot live a life like mine filled with so many dramatic exits without waiting for the next one.

My brother visited my ex-husband and me at our South Lake Tahoe cabin that year – a little over a month before he died. He was late because he was enjoying the ride on his Harley. When he arrived I yelled at him for being late and worrying me and he replied that I needed to be prepared because he would probably die on a bike. The next day he asked me to make sure my niece was okay if something happened to him. He made me promise.

The week he died he dropped in from Southern California – he’d started out that day on a ride and just kept going all the way to the Bay Area. I yelled at him for not calling first – hey, that’s what sisters do. Then I hugged him and told him that he had to be careful because if he died I would be all alone. He reminded me that I had Sam, his daughter. Then he left.

My brother was my person, my touchstone, half my memory and the only one who shared with me the wasteland of our often violent and disruptive upbringing. Our father beat our mother almost every day and my brother protected her as soon as he could toddle. Our mother was schizophrenic and often off of her meds. The point is, we had each other and only each other and we were connected beyond our DNA. After we grew up there were long periods when we did not speak or were separated by miles and even outlook. These separations did not matter. He was my brother, my other half, my memory, my connection to a childhood that we survived together and that no one else knew the truth of – and I was his.

Every August 13 I remember that his first word was my name – and we were not even living in the same house at the time, our mother was on one of her enforced absences, by which I mean she was committed.

I remember seeing him walking across the parking lot from the hospital window as our father lay in a coma and thinking that now, no matter what, I would be okay.

I remember holding his hand as our father slipped away and he stayed strong as I broke down. I know now that our father’s death and the death of his wife were the two times my niece saw him cry.

My brother joined the Marines when he was eighteen.  I was married at the time to my ex-husband and living in San Jose while he was stationed in Southern California. When he had leave he would bring his friends from boot camp to my house to visit.

I remember waking up and going out to get the newspaper in the morning, in my bathrobe with no makeup and my hair a mess, to find 20 Marines sleeping in our front yard having arrived after midnight and my brother deciding that he didn’t want to wake me up.

I remember my brother calling after his daughter was born – he’d picked out her name years before her birth, because he always wanted to be the father of a daughter.

I remember the last time my niece, my brother and I were together. It was after the 4th of July the year he died. They came to visit and we spent a day driving through the Santa Cruz Mountains, going to the beach, visiting spots from our childhood. My niece and I teased my brother mercilessly and he wore the smile I still see in my dreams, just a soft upturning of one corner of his mouth. It could be a smirk, it could be humor, it could be anything – that smile was always on his face.

And then I got a call.

The last time I heard my brother’s voice was when I canceled his T-Mobile cell phone plan. The T-Mobile employee was kind enough to let me listen to the message again, and again, and again – taking up too much time I am certain – until finally I officially cancelled my brother’s account and lost his voice forever.

Every August 13 I remember and I say goodbye again, and again, and again.

Goodbye Tommy, again.

 

 

Let’s all do the Solar Hokey Pokey as a way to stay sane in the convoluted, often obstreperous US solar market. In June, Nevada followed its relatively good deed concerning net metering with a head-scratcher of a decision when its governor vetoed bills that would have extended its RPS and instituted a state-wide community solar program. Florida, state of few incentives and much potential, just like an underperforming high school senior, stepped up to encourage a market for renewable deployment on commercial buildings.

In 2015 Nevada passed legislation eliminating retail rates for net metered solar PV installations adding fees and making the changes retroactive. In 2016 the legislation was altered to grandfather in systems installed before the 2015 change. In June 2017 Nevada Assembly Bill 405 raised net metering compensation to 95% of retail rates, locked in the new rates for 20 years and included other protections such as protection for system owners/lessees from fees and changes in rate classification simply on the basis of PV system ownership/leasing. Installers are also required to provide a ten year system warranty. Net metering in Nevada will decrease by 7% in 80-MWp tiers until it reaches 75% of retail electricity rates.

And then … on June 16 Arizona Governor Sandoval vetoed two solar related bills extending the State’s RPS and establishing a statewide community solar program calling the moves “premature.” AB206 would have extended the states RPS to 25% by 2025 and 40% by 2030. SB392 would have established a statewide community solar program that offered subscribers utility credits.

Meanwhile, back on planet progress and also on June 16, Florida Governor Rick Scott signed SB90 into law. SB90 allows an amendment passed in 2016 to take effect in 2018. It will make solar and other RE generating technologies installed on commercial buildings exempt from property tax for 20 years, again, beginning in 2018. It will also ensure that 80% of the value of the equipment is exempt from property taxes. In sum this means that property taxes will not increase for investors in renewable technologies installed on commercial buildings. The bill also includes protections for consumers.

Comment: Let’s all do the solar hokey pokey. Legislative progress is always one step forward and one step back for the solar industry and this is true globally, not just for the US.

You put some progress in

You take some progress out

You insert at tariff, minimum price, fee or other restriction

And you shake it all about

You do the solar hokey pokey

And you turn an emerging industry inside out

That’s what it’s all about

Lesson: Repeat the above refrain several times and then trudge on through the convoluted legislative landscape towards progress.

With apologies to Shakespeare, a readjustment of Sonnet 116, stanzas 1 through 8:

Let me not to the marriage of technology and market

Admit impediments. Innovation is not innovation

Which falters when market barriers it finds,

Or bends with conventional energy competition to remove.

O no, it is a dedicated mark

That looks on market misunderstandings and is never shaken;

Research, development and innovation are the stars to every wand’ring fad,

Whose worth’s unappreciated, although its necessity be accepted.

Technology development, that is R&D of new photovoltaic and other solar technologies, is the slow moving driver of the global photovoltaic industry without which there would be no champion cell efficiencies to announce, no government incentives to drive demand, no business models to take advantage of the incentives and no accelerated growth to appreciate.

Without innovation, dedication and a lot (a lot) of money there would be no photovoltaic cell technologies and without market buy-in no matter how achieved there would be no solar industry. In a market teeming with investors, venture capitalists, corporations, scientists, engineers and normal people just trying to understand what it means to them, misunderstandings about the timeline necessary to bring a photovoltaic technology to commercial production has doomed many a technology before it had a chance to innovate.

Crystalline cell technology is an example of a successful technology innovation. The original German Feed in Tariff is an example of a government incentive innovation. The point is that innovations must address something and then change something.

In the solar industry, the timeline from lab scale research through pilot scale production to commercialization is decades. Research and development into SunPower’s crystalline IBC (Interdigitated Back Contact) crystalline cell began in the 1970s at Stanford University. In 1975 research was published on IBC cells. In 1987 Ron Sinton, Sinton Instruments and winner of the 2014 Cherry Award, and the team at Stanford developed a 3 mm x 5 mm IBC cell with 28.3% conversion efficiency; this cell, which could not be soldered and was not stable, was a research step on the long innovative timeline from idea through commercialization.

Manufacturers are currently either announcing plans to add capacity to produce PERC (Passivated Emitter and Rear Cell) crystalline cells and modules or are actively adding capacity. Research into this technology began in the 1980s with the first paper published in 1989.

The point of this history is that technology development is a slow and rigorous process. At the end of this process market acceptance is not assured.

From idea through R&D, pilot scale, commercial production and finally finding a market, it’s about the money before it’s about anything else. Millions of dollars have been poured into the solar industry often without a successful outcome. Money is necessary and the dance to get that money leads directly to the kind of announcements that confuse observers and investors of the solar industry. Announcements have led to an under appreciation of the true innovative nature of commercial solar technologies and of the necessity to continue feeding the research machine that eventually grinds out a technology that has the potential to innovate.

The solar industry is populated by successful innovators and innovations from scientists working decades to develop solar cells, engineers designing modules, governments developing incentives to drive demand and business people creating models that enable adoption – solar in the universal sense, is an example of a successful and hard won innovation. All of this effort should never be taken for granted.

There is nothing new about protectionism just as there is nothing new about aggressive pricing for market share, dumping of overproduction at low prices and the cascade of unintended consequences of government intervention on markets.

A free market is precisely what the word free implies that is, market prices and the choice of goods are set by the interactions of market participants. Under this definition, there are few, if any, free markets in the world.

Governments intervene to subsidize or incentivize production of goods and the acquisition of goods. In the US, farmers sometimes received subsidies not to produce under the assumption that over production would lead to a price collapse. Electricity rates in US states must be approved by state PUCs. Subsidies provide affordable housing for poorer populations. Pick a market and you can find a government incentive, subsidy or a control of some sort.

So, seriously, there are few, if any, free markets.

The global solar industry relies on mandates, subsidies and incentives for its demand. Though it has enjoyed extraordinarily strong growth overtime this growth has come about because of, again, subsidies. Current low prices for PV modules are possible because of China’s support for its PV manufacturers.

The 2012 US resulted in higher prices for small buyers and, frankly, no price change for larger buyers. In sum, for larger buyers the sellers absorbed the tariff. The primary goal of sellers was sales, margin was secondary. Higher margins were gained from smaller sellers who also absorbed the tariff. Exporters were then not truly punished because the goals of the exporter (seller) were not properly understood.

The lesson is that market regulations, incentives, subsidies, mandates and tariffs come with unintended consequences. When tariffs are enacted the primary entity punished via higher prices is the buyer. The price pain felt by buyers is almost always the unintended consequence of the imposition of tariffs.

Just as markets are not entirely free, markets are also not entirely rational or controllable. Tastes change. Competing products rise. Drought and heavy rains affect agriculture. People go on strike. Recessions effect buying ability. Finally, sometimes people make irrational buying choices. Consider the cell phone which went from the size of a person’s arm to the size of a watch face to practically the size of a laptop computer screen and is now migrating back to not just watch face size, but to being an actual watch.

The point is that controlling buying patterns is close to impossible and punishing sellers for low prices typically punishes the buyers and worse … almost never brings back manufacturing jobs.

A good example of the unintended consequence of government intervention is the Smoot-Hawley Tariff Act of 1930. In the 1920s an excess of agricultural production in Europe led to low price imports of produce into the US. Farmers suffered and Herbert Hoover promised that if he were elected president he would help US farmers. (As an aside … if this seems familiar it should.)

Enter Willis Hawley, Congressman, Oregon, and Reed Smoot, Senator, Utah. Smoot-Hawley began as a protection for farmers but after much debate fed by many special interests it was eventually attached to a wide variety of imports (~900). Other countries retaliated with their own tariffs. The US trade deficit ballooned. Smoot-Hawley did not push the world into the Great Depression but it certainly was a card in the Depression playing deck.

In 1934, as part of the New Deal, President Franklin Roosevelt pushed the Reciprocal Trade Agreements Act through and the short reign of protectionism in the US ended … just in time for the beginning of World War II in 1939.

The Solar Point

Immediately following Suniva’s bankruptcy on April 17, rumors of a new trade dispute began and late in April Suniva, a US-based monocrystalline manufacturer over 60% owned by a Chinese company filed its trade dispute asking for a 40-cent/Wp tariff on all solar cells made outside the US. From Suniva’s point of view, the request makes sense as it is one of two crystalline solar cell manufacturers in the US the other being SolarWorld.

Proponents say that it would protect US solar manufacturing but as there is very little US manufacturing and the reasons for its demise are complex, there is little to protect.

Tariff opponents argue that cheaper prices for cells would help module assemblers and cheaper prices for modules would increase solar deployment.

The fact is that larger entities continued to enjoy low prices and will always enjoy lower prices than smaller demand side participants.

The fact is that bringing back US solar manufacturing is close to impossible at this juncture using tariffs. It would require a lot of time (a lot of time), favorable taxes for producers as well as other manufacturing subsidies and most important, a healthy incentive for buyers to purchase modules made in America with crystalline and thin film cells made in America and … even then … the aluminum, the glass, the backsheet – something in the module will come from some other country.

The fact is that the products bought in the US, including the foods we eat, are often produced using components from other countries.

Finally … well-meaning or crowd-pleasing government intervention in the not-so-free-not-so-rational-extremely-complex global market always brings a host of complications with it and always brings a host of unintended consequences. Just ask Mr. Smoot and Mr. Hawley.

 

There is nothing new about protectionism just as there is nothing new about aggressive pricing for market share, dumping of overproduction at low prices and the cascade of unintended consequences of government intervention on markets.

A free market is precisely what the word free implies that is, market prices and the choice of goods are set by the interactions of market participants. Under this definition, there are few, if any, free markets in the world.

Governments intervene to subsidize or incentivize production of goods and the acquisition of goods. In the US, farmers sometimes received subsidies not to produce under the assumption that over production would lead to a price collapse. Electricity rates in US states must be approved by state PUCs. Subsidies provide affordable housing for poorer populations. Pick a market and you can find a government incentive, subsidy or a control of some sort.

So, seriously, there are few, if any, free markets.

The global solar industry relies on mandates, subsidies and incentives for its demand. Though it has enjoyed extraordinarily strong growth overtime this growth has come about because of, again, subsidies. Current low prices for PV modules are possible because of China’s support for its PV manufacturers.

The 2012 US resulted in higher prices for small buyers and, frankly, no price change for larger buyers. In sum, for larger buyers the sellers absorbed the tariff. The primary goal of sellers was sales, margin was secondary. Higher margins were gained from smaller sellers who also absorbed the tariff. Exporters were then not truly punished because the goals of the exporter (seller) were not properly understood.

The lesson is that market regulations, incentives, subsidies, mandates and tariffs come with unintended consequences. When tariffs are enacted the primary entity punished via higher prices is the buyer. The price pain felt by buyers is almost always the unintended consequence of the imposition of tariffs.

Just as markets are not entirely free, markets are also not entirely rational or controllable. Tastes change. Competing products rise. Drought and heavy rains affect agriculture. People go on strike. Recessions effect buying ability. Finally, sometimes people make irrational buying choices. Consider the cell phone which went from the size of a person’s arm to the size of a watch face to practically the size of a laptop computer screen and is now migrating back to not just watch face size, but to being an actual watch.

The point is that controlling buying patterns is close to impossible and punishing sellers for low prices typically punishes the buyers and worse … almost never brings back manufacturing jobs.

A good example of the unintended consequence of government intervention is the Smoot-Hawley Tariff Act of 1930. In the 1920s an excess of agricultural production in Europe led to low price imports of produce into the US. Farmers suffered and Herbert Hoover promised that if he were elected president he would help US farmers. (As an aside … if this seems familiar it should.)

Enter Willis Hawley, Congressman, Oregon, and Reed Smoot, Senator, Utah. Smoot-Hawley began as a protection for farmers but after much debate fed by many special interests it was eventually attached to a wide variety of imports (~900). Other countries retaliated with their own tariffs. The US trade deficit ballooned. Smoot-Hawley did not push the world into the Great Depression but it certainly was a card in the Depression playing deck.

In 1934, as part of the New Deal, President Franklin Roosevelt pushed the Reciprocal Trade Agreements Act through and the short reign of protectionism in the US ended … just in time for the beginning of World War II in 1939.

The Solar Point

Following Suniva’s bankruptcy talk began, primarily in the solar press and SEIA, of a new US solar tariff. (Another aside, this may happen but it is a bit cart before the any animal you choose.)

Proponents say that it would protect US solar manufacturing but as there is very little US manufacturing and the reasons for its demise are complex, there is little to protect.

Tariff opponents argue that cheaper prices for cells would help module assemblers and cheaper prices for modules would increase solar deployment.

The fact is that larger entities continued to enjoy low prices and will always enjoy lower prices than smaller demand side participants.

The fact is that bringing back US solar manufacturing is close to impossible at this juncture using tariffs. It would require a lot of time (a lot of time), favorable taxes for producers as well as other manufacturing subsidies and most important, a healthy incentive for buyers to purchase modules made in America with crystalline and thin film cells made in America and … even then … the aluminum, the glass, the backsheet – something in the module will come from some other country.

The fact is that the products bought in the US, including the foods we eat, are often produced using components from other countries.

Finally … well-meaning or crowd-pleasing government intervention in the not-so-free-not-so-rational-extremely-complex global market always brings a host of complications with it and always brings a host of unintended consequences. Just ask Mr. Smoot and Mr. Hawley.

From the Price Chapter of the Report: The subject of price in the photovoltaic industry is easily misunderstood and often assumed to be synonymous with the cost of manufacturing. Misunderstandings are typically over the difference in inventory pricing, pricing from distributors and pricing directly from manufacturers. Spot prices for modules can fall into any of these three categories and are thus highly uninformative. Observing so-called spot prices daily, weekly or monthly price fluctuations without understanding whether the module comes from manufacturer inventory or is being resold from developers from failed projects does not aid in coming to an understanding of current pricing trends.

The subject of cost is also significantly misunderstood. Observers assume that prices for PV cells and modules relate directly to the cost of manufacturing these products. This is not the case. In many cases significant subsidization of domestic manufacturing completely obscures the true cost of manufacturing cells and modules without subsidies. In some cases manufacturers purposely obscure the true cost of manufacturing in order to appear both more profitable and more efficient. China is the most recent and most significant country to both subsidize its domestic PV manufacturing and thus obscure the true cost of this manufacturing but it is by no means the only government/country do so. Among the other countries that have supported domestic manufacturing by offering incentives and subsidies for manufacturers are Germany, Japan and to a lesser degree the U.S.

Many times the assumed cost of manufacturing is arrived at by back-engineering from a price point using methodology that assumes a gross margin of, for example, 20%. This method of arriving at an assumed cost of manufacturing typically yields incorrect data for cost that continues to support prices that are too low.

In 2004, the global PV industry entered a period of prolonged accelerated growth stimulated by the European feed in tariff incentive which spread quickly from Germany to other countries. In its early iterations, this incentive was simple and profitable and as such invited investors to take risks on non-commercial technologies. The utility scale (multi-megawatt) application was an outgrowth of investor interest in seemingly stable FiT returns. During the early 2000s capacities to produce technology increased significantly while prices decreased significantly; for example, prices decreased by 42% in 2009 over the previous year, by 16% in 2010, by 23% in 2011 and by 45% in 2012. Unfortunately, these price decreases were misunderstood as a sign of economies of scale and it was widely assumed that the industry had reached grid parity. These assumptions were largely based the misunderstanding that price was closely correlated with cost and that price decreases represented progress.

During this period of strong activity, manufacturers in China entered with aggressive pricing strategies that rapidly drove PV manufacturers into a prolonged period of negative margins, company failures and consolidation.

In 2001 global shipments were 352-MWp and China’s photovoltaic manufacturers had <1% share. In the mid-2000s the market for solar deployment accelerated, driven by the feed-in-tariff incentive model. Between 2004 and 2009 accelerating demand for solar deployment met with a severe shortage of polysilicon starting material and therefore crystalline module product. Prices for modules increased and smaller markets outside of Europe had trouble sourcing module product. In 2004 China’s manufacturers had a 1% share of the global shipment total, 1.1-GWp. By 2007, China’s manufacturers had a 21% share of global shipments. By 2010 China’s manufacturers had a 38% share of global shipments.

How China’s manufacturers accomplished this feat has been and still is debated. On one hand the country’s manufacturers enjoy significant and generous incentives and subsidies from the central government as well as local governments. Initially labor was far cheaper in China than it was in other countries and other costs, such as electricity were also less expensive. Debt has always been a murky topic concerning China and its manufacturers expand, in some cases, using grey market debt (shadow lending).

China’s astounding and rapid success and domination of photovoltaic manufacturing also owes a lot to the market reform of Deng Xiaoping. Under Deng Xiaoping in the 1990s a new breed of businessperson came into being laying the groundwork for the country’s PV pioneers in the mid-2000s.

Aside from significant government support, China’s pseudo-capitalists operate like free market capitalists and, as long as they do not run afoul of the central government as Suntech famously did in 2013, are free to succeed relatively margin-free. China’s PV manufacturing sector is less risk adverse than in other countries and more willing to move rapidly past historic PV industry norms such as, in some cases, pilot scale manufacturing. There are also fewer manufacturing regulations.

Much has been written recently about the relationship of the US stock market to the rapid growth of China’s photovoltaic manufacturing sector. Suntech filed its IPO in 2005; Trina Solar filed its IPO in 2006 while Yingli and LDK filed their IPOs in 2007. It cannot be denied that the proceeds from the IPOs fueled rapid expansion for many of China’s PV manufacturers however, it is equally true that the foundation for success for all its manufacturers were grants as well as loans at favorable repayment terms from the central government and local governments.

Recent rapid expansions of manufacturing capacity in South East Asia that are, in some cases, relocation of equipment from China to Thailand, Vietnam and Malaysia, are the result of high levels of manufacturing capacity and price pressure significant enough to finally give the minimum price (MIP) in Europe and tariffs in the US some weight.

PV industry pricing began recovering in 2013 for many reasons including recovering economies and government price intervention in Europe, the US and other countries.

In Q3-2016 prices for photovoltaic crystalline cells and modules decreased dramatically driven downward by an unfortunate stew of overcapacity, vulnerable markets as well as aggressive pricing (China) and defensive pricing (India).

In Q1 2017 manufacturers began selling future production of modules in the $0.30/Wp to $0.40/Wp range. Though this range is typically only available to larger buyers it coincides with inventory sales from manufacturers and distributors that has dipped into the $0.20/Wp to $0.30/Wp range.

This situation, sales of future production, cements the current low pricing phase while potentially increasing prices to the smaller buyers.

The average price (ASP) includes a wide range of price strategies and differs country by country. The average prices for modules in 2016 by country were:

  • U.S., $0.61
  • Japan, $0.62
  • Europe, $0.61
  • China $0.47
  • Taiwan (primarily for cells), $0.22Wp
  • Malaysia $0.53/Wp
  • South Korea $0.76/Wp
  • Singapore $0.65/Wp
  • Philippines $1.47/Wp
  • India $0.44/Wp
  • Vietnam $0.43/Wp
  • Thailand $0.51/Wp
  • Global Module ASP: $0.54/Wp
  • Global Cell ASP: $0.22/Wp
  • Global Multicrystalline ASP $0.44/Wp
  • Global Monocrystalline ASP $0.67/Wp
  • Global High Efficiency Monocrystalline ASP $0.86/Wp
  • Global Thin Film ASP $0.59/Wp