Junko Movellan, Senior Analyst, Solarbuzz
During the Solar Power International (SPI) show in October, members of the US photovoltaic (PV) industry had a heated discussion concerning how far module prices would fall, and whether anyone could make money in the current environment. SPI is the largest PV show in the US. On the second day of the show, SolarWorld filed antidumping and countervailing duty petitions with the US International Trade Commission and the Department of Commerce.
Does globalization help or hurt the industry? How can the industry, which requires government subsidies, ensure sustainable growth?
The US PV market has being going through massive growing pains. Companies are still learning how to operate in an industry more dependent on government subsidies and subject to their fluctuations. One of the most significant changes is an influx of Chinese modules. Though it does not fully represent the entire US market, for our analysis below, we used data from the California Solar Incentive (CSI), the largest PV incentive program in the US.
Based on data from CSI, Canadian Solar, Suntech, Trina, and Yingli together accounted for 3% of total completed system capacity in 2008. During the eleven months of 2011, their share jumped to 36%. At the same time, the market share of Japanese module makers has decreased. In 2008, Kyocera, Mitsubishi Electric, Sanyo, and Sharp together accounted for 39% of CSI completed system capacity. However, their share dropped to 18% in 2011, a loss of over 20%.
Looking at installed capacity reveals even more about the influx of Chinese modules. In 2008, less than 150 MW DC were installed under the CSI program. Between January and November 2011 >250 MW was installed. It is not an exaggeration to say that the Chinese modules were responsible for the 100 MW increase.
From 2008 to 2009, Canadian Solar, Suntech, Trina, and Yingli were responsible for a 90 MW increase, while the amount attributable to their Japanese counterparts decreased 10 MW.
Solarbuzz historical data shows the same trend for Chinese modules. The share of Chinese modules increased from about 6% of the national PV market in 2008 to 37% in 2010. Solarbuzz projects that their share will continue to increase in 2011.
So where is this trade dispute taking the US market? Initially, falling module prices were a blessing to the industry. Companies could finally provide affordable PV systems at a time when both federal and state incentives were running out. The PV industry is still unsustainable without government subsidies or further cost reductions.
PV companies market themselves as “Chinese-manufactured,” “German-based,” or “American-owned,” but in actuality, they are global companies. They thrive on maximizing profit, and doing business wherever they can achieve better profit margins. If the US market seems too competitive and too uncertain, global companies will allocate resources to other growing markets that are less hostile and offer better government support.
While the German market is declining, the Asian markets including China, India, and Japan are becoming more promising, and are offering new incentives. In the past, module shipments have moved to countries that offer incentives. For example, this happened when Germany implemented the first FIT, or when Spain and Italy implemented generous FITs.
There have been discouraging signals coming from the US market recently because of the scandal surrounding the DOE Loan Guarantee to Solyndra; the possible expiration of the 30% cash grant; the declining SREC markets on the east coast; and the recent trade dispute. Can the US market overcome these obstacles? Unlike countries with one national FIT policy, the US market is diversified in geography, in end markets, in financial options, and in types of incentives. During 2012, the US market will experience some bumps, and will need some tweaks here and there. However, the industry will create innovative products or services or business models that ensure its continued growth.
