Time is the primary difference between a fad and a trend.  Fads are fleeting. Trends develop overtime altering behavior in some relatively permanent fashion.  The adverb relatively is used as permanence has become, over time, far less permanent.  Fads ebb and flow more quickly than trends.  The best way to tell the difference, unfortunately, is in hindsight. For example, the European FiT model is responsible for jump starting the utility scale (or multi-megawatt) application for solar technologies.  The initial highly profitable FiTs attracted investors who, forever in pursuit of the holy grail of safe investments, encouraged demand and supply side solar participants to build ever larger installations.  Initially, many long time solar participants believed that demand for multi-megawatt installations (particularly for PV) would reach a peak and decline, likely along with the profitable FiTs. Instead this trend appears to be here to stay – for better or worse, or, for profit or not-so-profitable.  Another example, turnkey equipment sales, appears to have been a fad that faded away relatively quickly – that is, in solar years.  Just as dog years are longer than human years and often used as a metaphor for the slow passing of time, solar years are also longer than human years.  To gauge the length of a solar year observe announcements and the accompanying timeline creep from announcement, re-announcement and fruition. 

Five potential trends and the likelihood of continuation or cessation are:

Potential Trend 1: Merchant systems:  These systems may or may not be multi-megawatt and are sold without a PPA or tender and potentially without an incentive.

Why this may not become a trend:  The high upfront cost of installation, no matter how low component prices go, is a roadblock to many potential system buyers.  Moreover, in many countries it is illegal to set up an independent utility from which electricity is sold.  To become a trend laws would have to change and/or deep pocket customers must be found and cultivated. 

Why this may become a trend:  Utilities understand the efficiency of owning the means of production. Once they become more comfortable with solar in terms of the variability of its resource it will make sense to control it because of a) its free fuel b) low maintenance c) positive PR afforded the utility and d) return of control over profit.  Mining concerns are often remote and require reliable power; solar is a long term investment that when combined with storage (yes too expensive still) or another power source (hybrid) offers a long term answer to energy requirements.  Finally, should laws change the lure of becoming an independent utility; though this is in-and-of-itself probably a fad should encourage system ownership.

Benefits of this trend: Solar (PV, CSP, CPV) is ideal for this potential trend as once installed it is low maintenance (though not zero maintenance), reliable and works well as part of a hybrid installation.  

Odds of this trend:  40% this potential trend will get a lot of press in 2014, but to become a true trend (something that brings with it relatively permanent change) more than announcements are needed.  Changes in the laws of some countries need to change and the initial gold rush atmosphere (which will bring with it saviors and shysters) must subside. The likely timeframe for development of this trend is five years, but ten years to mature. 

Potential Trend 2: Residential Lease Model:  Removes the onus of educating energy consumers about owning the means of production and encourages more rapid adoption of PV.

Why this may not become a trend:  Currently a US phenomenon, there is no standardization of lease vehicles, little understanding of solar among energy consumers, not everyone owns their own roof or if they do, own a roof that is young enough in its lifetime to support solar and once the math is done, a low interest loan and buying the system makes better economic sense. Other drawbacks include what happens should the lessee want the system removed, or, sell the house, or abandon the house.  Should there be expensive and well publicized roadblocks to system removal this potential trend would end.

Why this may become a trend:  Particularly in the US, independence (from practically any interference in anything) is a closely held value.  Many energy consumers would like to control energy costs but cannot afford to buy a PV system, plus, the lure of free solar (a promise in many ads for solar leases) is compelling to many.  The lease concept is familiar, even though many may find the details confusing.  Finally, the concept of owning the means of electricity production has proven stubbornly difficult to get across or to encourage excitement about – the solar lease hops over the need to educate and still may lead to more residential PV system ownership. 

Benefits of this trend: More solar is the obvious benefit of the solar lease. The assumption is that seeing more solar in neighborhoods will encourage people to explore owning or leasing a system.  There is also the potential of expanding this trend to apartment complexes, wherein (similar to the merchant system) the apartment house owner would sell electricity from the solar installation to apartment dwellers (a group is pursuing this model in France).  

Odds of this trend: 67% for better or worse and love it or hate it, the solar lease trend is likely real and will hopefully mature into a vehicle with costs (including escalation) that more closely resemble the true costs of owning a solar system.  Escalation charges based on assumed utility rate increases need to be rethought.  

Potential Trend 3: Community solar, solar gardens or Group Owned Solar:  Call it whatever you like, typically this model allows people to buy shares in solar installations that serve the community.  The installations can be ground or roof top, on or near community centers or schools and also on reclaimed land (among other areas). 

Why this may not become a trend:  The initial installation remains costly and community buy-in must be encouraged in order for this to make economic sense. That is, enough people need to buy shares and agree to whatever the terms are or the cost would likely appear prohibitive even though the benefits such as cleaner air and controlled costs in the long term are clear.   

Why this may become a trend:  The off-grid solar community has much to teach the grid connected solar community in terms of educating populations, gaining enthusiastic buy-in and finally deployment of a concept that is decades old.  In the developing world this concept is not a trend it is established.  Communities with group owned installations are enthusiastic about being a part of an energy generating asset, their participation in ameliorating climate change as well as the educational aspects. 

Benefits of this trend: Educating the community about solar technologies, climate change and energy independence is one of the most significant benefits of this trend.  Participation in in community solar projects and plans also encourages utilities (in the US there is slowly growing utility participation in this model) and energy consumers to work more closely together as well as share ideas and, well, energy.    

Odds of this trend: 63% this trend is building slowing in the US and the model can be co-opted by other countries and regions around the world.  Studying village grid (micro grid) models in the developing world would offer insight as to how community members learn to work together towards the success of these installations.

Potential Trend 4: Storage:  Storage technology is, on its own, not a trend (R&D is decades old), nor is it necessarily crucial to future grid connected solar deployment. Interest in storage technology for grid connected deployment is currently high, but interest alone does not a trend make. Storage is crucial for successful off grid solar deployment and is mature in this regard through the use of lead acid battery technology. 

Why this may not become a trend:  Storage is expensive and its value, essentially independence from the utility grid, has not been established. The true costs of storage are currently obscured, that is, current prices do not reflect costs.  Unfortunately, it may not be possible to increase the price that provides enough cushion in the margin for quality control, R&D and profit.  As with other technologies, unfortunately, many may enter with potentially viable technologies and many may fail because they could not price product appropriately.  Finally, disconnecting from the grid and becoming self-sufficient requires a willingness to conserve, which is rarely popular.

Why this may become a trend:  Utilities are showing concern about the growing size of residential and small to medium commercial installations that are sized to cover 100% of the energy needs of the building and its inhabitants.  This cuts into utility profits.  The only way for utilities to control this is to a) own more solar installations (the means of production) and sell the electricity from these utility owned assets b) develop utility solar lease models for their rate payers where the utility installs solar on the roof and charges the roof owner a set rate and finally c) charge a monthly fee for grid access as back up, among other reasons.

Benefits of this trend: Self consumption and the use of solar encourage a more pragmatic attitude towards energy also encouraging conservation. Storage could allow for true energy independence from escalating energy costs.

Odds of this trend: 31% Storage is still too expensive and a sudden miraculous technological breakthrough is unlikely.  Instead, options that do not reflect the true cost and thus teach nothing about the true value of the technology are currently being deployed.  This potential trend likely needs ten years and a lot of investment to begin approaching viability.  

Potential Trend 5: Solar Deployment in Latin America:  Solar technologies are not new to the countries in Latin America. Deployment of off-grid applications in the region is well established.  Tender bidding is the preferred vehicle for large commercial installations and there is potential among mining concerns for merchant system sales.  

Why this may not become a trend:  High import duties in many countries, unstable economies, significant reserves of oil, potential reserves of natural gas (fracking), unwelcoming topographies and low tenders are a few of the risks in the region that indicate the hoped for level of deployment may not come to pass.

Why this may become a trend:  The need for reliable energy generating options is strong among the countries in this region and though affordability is not strong, there are entities willing to invest in merchant installations (mining concerns) as well as almost monthly tenders for energy generation in the countries of Central America, South America and the Caribbean.  Deployment has begun on a fraction of the multi-gigawatts of potential. 

Benefits of this trend: As solar deployment increases and should it begin to tiptoe near the promised multi-gigawatt level, this region is likely to invest in domestic manufacturing, which hopefully would mean cell technology development as well as module assembly. Given the high cost of Greenfield manufacturing, module assembly appears more likely.  Nonetheless, the construction (demand) sector would provide necessary jobs and the supply (cell, thin film and module assemble) would provide necessary jobs. Deployment of reliable, clean solar energy technologies could be a stabilizing factor of future energy costs. 

Odds of this trend: 44% though deployment has begun and queues of solar projects in many countries are long, taxes are high and actual deployment is moving at a snail’s pace.  A regional economic shock could derail many projects.  Tenders are, in most cases, too low to support profitable installations.  The highest likelihood is that deployment will continue resulting in a percentage of the expected gigawatts but certainly above past levels of annual installations.   

One of my goals for 2014 is to continue doing serious work, conducting market research using classic market research principles and to make my living by providing value to my industry and to my clients by focusing on my own constant quality improvement and providing unbiased, independent and objective market research as a base for the true visionaries of this industry. 

Another goal is to continue giving back to this industry — solar — that has given me so much in return for my efforts. So, here’s to more solar in 2014, positive margins for all, new start up activity — globally — accurate reporting of costs, less aggressive pricing, high quality, more DG solar on schools and in communities — globally, more investment in off grid solar for developing regions of the world and industrialized regions, a focus on energy efficiency and an understanding that conservation and sacrifice are not synonymous– the real sacrifice is the damage we are doing to our environment. For my community of solar professionals and for everyone who wants a future of cleaner air and energy independence — Happy Holidays and a wonderful 2014.

Companies make announcements for a number of reasons:

1. To call attention to something worthy of attention
2. To divert attention from something else
3. To legitimize something (under the heading, everything you read in the news or in a press release must be true)
4. To keep the company’s name in the public’s mind
5. To announce a new product available for sale
6. To correct mistakes or apologize (under the heading of, whoops, we really did not mean it)
Announcements are not data. Examples include announcements to distribute a product in the future that is not yet in commercial production and for which one party has no financial stake, or, announcements of results for champion cells/modules that are likely years away from commercial production, among others.

In market research, the process is the most important thing.  The first goal of a market researcher should be to eliminate bias so to arrive at an independent analysis that may or may not fit with the beliefs of the client.  The goal in doing so is to provide the client with an objective assessment of what is being studied to protect the client from internal bias wherever possible.  While it may be uncomfortable when the results of research disagree with internal views, the value of independent analysis is that it forces a rethinking of beliefs as well as offering a degree of protection against the unexpected and potentially costly unknown, as well as the cost of complacency.  The very practice of market research tends to neutralize complacency because if the population is set up correctly and enough data are gathered to appropriately represent the population being studied, what you believe becomes unimportant.The rigor of objectivity is what all market researchers strive for in their work.

Usually I follow a strict protocol with Notes from the Solar Underground as well as other sections of the Solar Flare, that is, stick to the data and facts and keep the ‘I’ out of the writing. In this issue I am breaking from this tradition and getting personal. October 27th was the anniversary of my first year in business – first year as a small business owner – first year without a regular paycheck and with mistakes, successes and everything in-between, what a year it has been.

During this year I have rediscovered, not that I had forgotten, both the value of independent unbiased analysis as well as how difficult it can be to stand behind an independent, unbiased view when it disagrees with the closely held beliefs of others. While it may be uncomfortable when the results of research disagree with internal views, the value of independent analysis is that it forces a rethinking of beliefs as well as offering a degree of protection against the un-expected and potentially costly unknown. What I refer to here is the unexpected event that is unaccounted for simply because it falls outside of imagining.

For the past 16 years I have worked in an industry of entrepreneurs and pioneers – brave people who have chosen to base their careers on developing and deploying a technology that is considered too expensive by many and which competes with entrenched conventional energy. My mentors have always had high ideals and standards, fought tough odds where success is anything but ensured and continued fighting against all odds and in the face of failure and the unrelenting undervaluing of the industry’s product: clean solar energy. I work with and for my mentors and heroes, a group that includes installers, manufacturers, business people and government employees. Everyone I know well in solar is dedicated to the common cause of changing the world and making the air safe to breathe.

My goal is to keep setting the bar higher every time I complete an analysis, a report or a project. The solar industry – against all odds – has an upward growth trajectory – so should quality. I am lucky to serve an industry that, though often beleaguered and truly quirky, also enjoys a wealth of creativity, passion, courage, and true grit in the face of significant obstacles to its success.

Happy birthday SPV Market Research, I hope to see you grow and eventually, I hope to train the next generation of solar market researchers – who will be brave enough, curious enough and passionate enough to set the bar ever higher and take this 38 year old solar market research practice and its mountain of data into the future.

Arguments that climate change does not a) exist or that b) humans are not responsible for accelerating it are exacerbating the quiescence of  observers, many of whom prefer to wait until action will no longer, sadly, ameliorate it.  Those making the arguments that climate change is not our problem to solve will not be able to avoid its harsher effects and nor will those who sit by waiting for proof.

Market research can be best understood as the study of the behavior of what is being observed over time to establish patterns (trends) through quantitative means so to extrapolate likely future behavior (typically selling and buying behavior).  At its best the survey effort should be directed to both buyers and sellers in a market with all questions developed to arrive at a quantitative response. 

Market research begins with identifying the appropriate population and the % of the population most likely to deliver responses that are representative of the whole.

The survey should be carefully constructed to eliminate the bias of the researcher as well as the bias of the survey population, that is, it should be highly quantitative in nature. 

A one to ten scale survey is qualitative, and while useful, should be backed up with quantitative responses.  This tool has high uncertainty. That is, the rankings are subjective.  One person’s two is another person’s five.

Polling that is yes and no surveys, are qualitative and while useful, should be backed up with quantitative responses. This tool has high uncertainty and should take into account the likelihood of respondents giving misleading responses.

Quantitative surveys: medium to low uncertainty and must take into account how the population was selected, the survey constructed, the bias of the analyst, the bias of the subjects and the bias of the client receiving the results. 

Uncertainty should always be factored into the analysis, that is, the methodology of the population (how it was set up) should be considered in that it may not be representative of the whole; also, what you didn’t ask, the % of answers assumed to be representative of the whole, how the questions were constructed, the bias of the analyst/researcher, the degree to which noise could be filtered out (other analyses and secondary data), the degree to which the bias of the subjects was filtered due to gathering an appropriate number of data, as well as the assumed responses of those who did not answer or who were not included. 

Even the most stringent and objective analysis can be undone by the market researcher’s own desire to see a different result and/or the researcher’s desire to please the client. The goal is and should be to provide an unbiased result that accurately represents the market as well as the participants in the market. The goal is to inform and aid the client in objective decision making.

Sample TOC, contact pmints@spvmarketresearch.com for purchase information.

3.1             Historical Industry Overview.. 6

Figure 3.1 Off-Grid Application Demand Profile: 2007-2012. 6

Figure 3.2 Off Grid & Grid Connected Application Growth, 1986-2000. 7

Figure 3.3 Off Grid & Grid Connected Application Growth, 1992-2000. 8

Table 3.1 PV Industry Growth 1991 – 2013 Estimate*. 9

Figure 3.4 Photovoltaic Industry History: 1976 to 2012. 11

Table 3.2 Application Trends 1996-2012 ^(1,2,3) 15

Table 3.3 Generic Application Segments. 16

Table 3.4 Regional Application Deployment, 2012*. 18

Table 3.5 Regional Demand, Installations and Shipments, 2007-2012*. 19

3.2             Application Market Share and Growth Rates. 20

Table 3.6 Aggregate Application Growth, 2007-2012*. 20

Figure 3.5 Low, Conservative & Accelerated Grid Connected Forecast, 2012- 2017. 22

Figure 3.6 Low, Conservative & Accelerated Off Grid Forecast, 2012- 2017. 22

Table 3.7 Major Application History, Growth, Forecast & CAGR Rates 2002-2022. 24

Table 3.8 Three Year Application Forecast, 2012 – 2015*. 25

Figure 3.7 PV Industry Inventory, Capacity, Production, Shipments, Installations & Defective modules, 2012  27

Figure 3.8 PV Industry Inventory, Capacity, Production, Shipments, Installations & Defective modules, Estimate 2013  27

3.3             Photovoltaic Revenue Growth. 28

Figure 3.9 Worldwide Cell/Module Revenue Forecast 2001-2017. 28

Figure 3.10 Worldwide System Revenue Estimate, 2012. 29

Table 3.9 Worldwide Module Revenues & Shipments, Conservative & Accelerated For cast 2002-2017 ⁽¹⁾ 2012 Current Dollars. 30

3.4 Selling Channels. 31

Table 3.10 2012 Selling Channels for Major Applications by Volume Share^{(1) (2)} 33

Table 3.11 Major Photovoltaic Application Categories. 42

3.5             Forecast Demand Volume 2012 – 2017. 43

Table 3.12 PV Industry Application Growth* 1987-2012. 43

Table 3.13 Conservative Application Forecast, 2007-2017*. 45

Table 3.14 Accelerated Application Forecast, 2007-2017*. 46

3.6             Market Sector Analysis. 47

3.6.1         Market Share by Application and Module Size. 48

Figure 3.11 Market Shares by Module Size, 2011. 48

Figure 3.12 Market Shares by Module Size, 2012. 49

Table 3.16 Historic Market Share by Application & Module Size ^{(1) (2) (3)} 50

Table 3.17 2012 Market Share by Application & Module Size⁽¹⁾ 51

Figure 3.13 Market Shares by Technology, 2010, 2011, 2012. 51

3.6.3         Remote Industrial Application. 52

Figure 3.14 Remote Industrial Regional Market Shares, 2012. 52

3.6.3         Remote Industrial: Communications and Telemetry. 53

Table 3.18 Communications & Telemetry, MWp & % of Category 2007-2017^{(1) (2)} 54

3.6.4         Remote Industrial: Cathodic Protection. 58

Table 3.19 Cathodic Protection Applications MWp & % of Category, 2007-2017^{(1) (2)} 60

3.6.5         Remote Industrial: Transportation Signals. 61

Table 3.20 Transportation Signals Applications MWp & % of Category, 2007-2017^{(1) (2)} 64

3.6.7         Remote Habitation. 65

Figure 3.15 Remote Habitation Regional Market Shares, 2012. 65

3.6.8         Remote Habitation: Water Pumping. 66

Table 3.21 Water Pumping MWp & % of Category, 2007-2017^{(1) (2)} 68

3.6.9 Remote Habitation : Village Power. 70

Table 3.22 Village Power Applications MWp & % of Category, 2007-2017^{(1) (2)} 72

3.6.10       Remote Habitation: Outdoor Lighting. 76

Table 3.23 Outdoor Lighting Applications MWp & % of Category, 2007-2017^{(1) (2)} 78

3.6.11       Remote Habitation: Other. 79

Table 3.24 Other Applications MWp & % of Category, 2007-2012^{(1) (2)} 80

3.6.12       Consumer Power. 81

Figure 3.16 Consumer Power Regional Market Shares, 2012. 81

Table 3.25 Consumer Power Applications MWp & % of Category 2007-2017^{(1) (2)} 84

3.6.13 Grid-Connected. 86

Figure 3.17 Grid Residential, Commercial and Utility Regional Market Shares, 2012. 86

Figure 3.18 Grid-Connected History & Forecast, 2012-2017*. 88

Table 3.26 Grid-Connected Application Growth 1992-2012*. 89

Table 3.27 Grid Connected Applications MWp & % of Category, 2007-2017 ^{(1) (2)} 90

Table 3.28 Summary of End User Concerns*. 93

Table 3.29 US and EU 2012 System Price Averages*. 98

3.6.14        Consumer Indoor. 99

Figure 3.19 Consumer Indoor Regional Market Shares, 2012. 99

Table 3.30 Consumer Indoor MWp & % of Category, 2007-2017^{(1) (2)} 101

3.7             Application Forecast to 2022. 102

Figure 3.20 Long-Term Photovoltaic Forecast, MWp 2002-2022. 102

Figure 3.21 Long-Term Price Forecast, MWp 1992-2022. 103

A good forecast should be defined by its applicability to the market it addresses and its usability.  A good forecast should define the total addressable market as well as considering all limitations to addressing the full market thus arriving at a conservative and risk identifying assessment.