Archives for posts with tag: Solar

As deployment of PV has entered the gigawatt range globally, quality, both in terms of PV modules and installations, is increasingly coming under scrutiny.  Quality installations and PV components should have always been of primary concern to the solar industry and its many stakeholders.  Decreasing incentives and PPA/tariff rates set by bid have put pressure on quality control for both components and installations. 

Though recycling is important, it is equally important to have an industry focus on increasing
quality requirements.  Simply put, a minimum standard, which most standards are, is not enough.  The PV industry is simply too small in comparison with conventional energy and wind to accept less than the highest quality. Acceptance of lower quality will come at a high cost in terms of solar’s future as a primary electricity choice in the future energy mix.

Access to capital is a growing entry barrier inthe photovoltaic industry, with the caveat that access to capital alone is insufficient to compete.  As the cost of establishing and maintaining a com­petitive PV business increases, the ability to convince investors or parents to commit capital will be critical.  Capital commitment will not only determine business direction; it will dictate business survival.

Industry cycles are not creating a positive atmosphere for investors.  Solar-grade silicon supply, quality, and pricing are limiting scale-up and driving down yield.  Manufacturers are now looking at thin films as a potential solution, but high-yield thin-film production in volume has yet to be established to meet the growing market demand.

 Over the next ten years, investment will be needed in three key areas for PV cost reduction to continue:  increased capacity and automation, solar-grade silicon supply, and development and promotion of sustainable markets.  Without an investment in each area, market growth and cost reduction will slow down.  Sustainable market development will involve market education, increasing low-interest financing in the industrialized world and creating financial mechanisms and infrastructure in the developing world.  As capital requirements increase, the importance of the strategic business decisions are magnified.  Spe­cific business development plans will need to be formed with near- to mid-term profitability as the common denominator.

With the rapid deployment of gigawatt levels of capacity, much of it into multi-megawatt installations, quality has become a concern for module product as well as system installations.  As an offshoot of quality concerns, production output (kilowatt hours) has also come into focus as PPA (power purchase agreement) or tender bidding often results in low remuneration per kilowatt hour.  For systems from which electricity is sold volume (more kilowatt hours) is crucial to profitability.  Because of this system and module due diligence has become important and insurance products are becoming more important as are operations and maintenance contracts.  As industries mature and deployment increases aftermarket products (such as insurance and warranties) become important revenue generators.   In the next several years there will likely be an overabundance of such products as well as shrinkage as the market becomes over served. It is crucial for new entrants (at all points in the value chain) understand that the photovoltaic industry continues to evolve and remains quite young in its history.  The profitable FiT model was a short lived phenomenon unlikely to be repeated.  As the industry grapples with developing pricing models that support R&D and quality control it must also cope with a rapid change from FiT to bidding processes.  The industry is currently not mature enough to make assumptions about which business model will provide the wining balance of profitable margins and value to customers.  Among the many misconceptions that need to be reversed is the successful selling of the photovoltaic industry product as a commodity, instead of a high value means of electricity production.

Tariff’s on wafers, cells and modules imported from China are in vogue these days. In June, the European Commission imposed tariffs in a graduate fashion with an 11.8% tariff beginning on June 6 and a 47.1% tariff beginning on August 6.  The reason for the two-step process is to encourage the government of China to negotiate. Commentary:  With the loss of several industry pioneers as well as startup PV technology companies of varying degrees of potential (from zero potential through mildly interesting to possibly groundbreaking) the damage of too-low prices for PV c-Si technology is already done. It might have been possible to mitigate the cost of aggressive pricing several years ago. Unfortunately, when the current period of underpricing began it was termed (by everyone) as progress towards grid parity.  Business entities and the individuals that make up these concerns on all spectrums of the PV value chain have been affected by too low prices and/or tariffs. Current module prices do not leave any room for R&D (innovation) and sadly, in some cases quality control.

 

            Call it the copycat syndrome or marketing burnout wherein a company has a success with one product at which point every company in the space copies the effort leaving a market dotted with me-too products with little differentiation other than price.  Eventually through this process value is suctioned out of the product or service, demand wanes, and consumers move on.  It is almost impossible to satisfy consumer desire for the cheapest or most innovative product/technology/service/oh-heck-anything, particularly as in the end the equilibrium price may well be zero while innovation may be defined as simply announcing that something is innovative.  Sometimes, particularly with software or the internet (which move much faster than PV technology development), ennui with the copycat syndrome drives innovators to ask new questions and these questions lead to new directions and products – for example, something will replace apps and disrupt not only software but the tablets, cell phones and computers that are now set up as app delivery devices.  

            Caution:  A PV system and its components cannot and should not be confused with the world of software, computers, the internet, tablets or apps. PV is, however, a disruptive technology and one of the things it disrupts is the utility business model.  This is why net metering and interconnection are hard fought gains for the PV industry and should not be discarded or compromised away.  Given the dire state of the global environment, eventually energy efficiency measures will be standard, accepted behavior and control of an individual’s energy future, which DG PV is a perfect fit for, will become an accepted energy choice.

            The lust for the next breakthrough has led to a disregard for the innovative process – which is at once lonely and interactive.  One good idea may come from many bad notions.  In solar, a technological or scientific breakthrough almost always comes after years of dedicated research with much iterative progress (and regression) along the way – good research of any kind is repetitive, exhaustive and often exhausting. Most good research is practiced for the love of the process, which involves asking the appropriate questions and establishing the appropriate systems to arrive at, perhaps, more questions.  The point is that innovation is symbiotic: that is, it is the living, breathing result of all the magical thinking (which is innovation) and hard work that went before and it lives to serve the ideas of the future.

            In the decades-young terrestrial PV industry there are daily announcements of breakthroughs and innovations all of which are based on work that began decades ago and will continue decades from now.  There really is no end game to increasing efficiency and decreasing manufacturing cost – these goals, along with myriad of research into materials et al will continue. The hunt for a big bang discovery that will change the face of the PV industry ignores the years-long timeline from lab-to-commercialization while unintentionally trivializing the hard scientific work that the industry is founded on. It just ain’t that easy – nor should developing an energy generating technology that will sit in the sun for 30+ years and reliably generate electricity be easy or quick.  

            Developing innovative business models in an industry driven by incentives and challenged with downward price pressure and low margins is also not a walk in the solar park.  To date, an innovative method of selling PV installations or the electricity from these installations that is specific to the true costs of the system while building in margin and value for all participants has not been developed.  Even solar leases are more about conventional energy and utility costs than the costs attributable to a solar electric system.  After all, there should not be an escalation charge on the sun’s fuel because though the equipment to convert the fuel has a cost, the fuel from the sun does not. Educating energy consumers about the value of owning the means of energy production (independence from volatile utility-rented electricity) is both difficult and worthwhile. 

            The PV industry remains beset by challenges (many self-developed and self-propagated). Challenges include competing energy substitutes as well as the daunting task of overcoming entrenched electricity renting habits, not to mention continuing to deliver high quality products while struggling to prop up negative margins.  In the end … did you hear the one about carbon dioxide levels passing 400 parts per million?  — That’s reason enough to continue with the solar challenge.