2011 Report Card plus my 2012 trends and predictions.
by Edgar Gunther
Contrary to my stated goal, the Photovoltaics: 8 Trends to Watch in 2011 review and 2012 photovoltaic (PV) trends and predictions post has once again extended well into February. As usual, I won’t be grading on a curve.
Photovoltaic Market Demand Growth
Last year, I said:
In 2011, I predict at least 35% global PV installation demand growth despite Feed-in Tariff (FiT) headwinds in Germany, Italy, France, the UK, Ontario, and the Czech Republic.
To be honest, I’ve been pessimistic since midyear 2011 and was even more so when there was limited demand elasticity impact from declining module prices on 3Q11 (third quarter of 2011) PV installations. Perhaps it was my turn for PV business “Doom and Gloom, an Overreaction”.
Let’s credit IHS iSuppli (21.2 GW, GigaWatt), IMS Research (22-24 GW), and Solarbuzz (23.6 GW) for sticking with their 2011 PV forecasts albeit with upward revisions although installations pushed out into the fourth quarter. Both IMS Research and iSuppli now believe global 2011 PV installations exceeded 26 GW.
In the second part of the prediction, I said:
I don’t see the US more than doubling again in 2011 so PV installations will be below 2 GW.
While the final numbers are not yet in, Greentech Media Research has projected about 1.7 to 1.8 GW of US PV installations in 2011 based on the U.S. Solar Market Insight Report collaboration with the Solar Energy Industries Association (SEIA).
In 2012, I predict at least 25% global PV installation demand growth. I am tempted by the under since the early year Feed-in Tariff (FiT) headwinds seem stronger than ever with serious talk of a 1 GW cap in Germany and PV installations in Italy expected to decline sharply from 2011. Has the German PV market peaked with the estimated 7.5 GW of installations in 2011?
Per “Solar CEOs See Boom in China Will Ease Glut in 2012: Energy” by Alex Morales and Jacqueline Simmons for Bloomberg, Trina Solar Limited (NYSE:TSL) CEO Jifan Gao expects 5 GW to be installed in China and “global demand of 30 gigawatts to 35 gigawatts” in 2012.
For the US, I’ll prognosticate at least 75% PV installation demand growth buoyed by modules purchased under the expiring 1603 Treasury Grant safe harbor, utility scale solar projects, and residential growth.
1603 Treasury Grant and Tax Equity
As far as I can tell, the Payroll tax cut extension deal on the table does not include the extension of the 1603 Treasury Grant Program (TGP). Outside of the budget, this may be the last opportunity to revive the program until after the US 2012 Presidential Election.
The scramble for tax equity already began last year when “Solar Industry Momentum at Risk” by Arno Harris at the Clean Energy Future Blog marked the point when new solar project development for 2012 and beyond was impacted by the 1603 TGP expiring yearend 2011.
US solar trade claim against China
“Solar Trade War: It Just Doesn’t Matter” by Eric Wesoff at Greentech Media argues the impact of tariffs, punitive or otherwise, on Chinese solar manufacturers will be limited because of a shift to regionalized manufacturing of “trade-compliant” cells and modules.
For political reasons, I’ll go further to argue the imposed tariffs will not be punitive but amount to a slap on the wrist. Indications are China will respond with equivalent retaliation against polysilicon imports from the United States. The message is abundantly clear from a headline just today at DigiTimes: “Four China polysilicon firms demand government start anti-dumping and anti-subsidy investigation against US firms, according to China media”.
I think the Harmonized Tariff System of the United States (HTSUS) schedule for the complaint subheadings will impose duties in a range from 2.5% to 10% on cells and modules manufactured in China and imported to the US. The duties will be tiered; cells will have a lower tariff than modules to encourage NAFTA (North American Free Trade Agreement) based module assembly.
Why these duties? Back in 2009, Trina Solar received an unfavorable ruling classifying solar modules as DC generators because of the bypass
diodes and was required to pay a 2.5% duty. While the tariff ruling was reported by the New York Times in “Solar Panel Tariff May Further Strain U.S.-China Trade”, the revocation on technical grounds [DOC] a year later was not publicized. The Solar Energy Industries Association (SEIA) lobbied for the reversal. I believe the incident provides a useful benchmark for reasonable tariffs on Chinese solar cell and module imports to the US that will be reflexively imposed on US polysilicon imports to China in response.
I don’t know why, but CASM versus CASE reminds me of Spy vs. Spy.
Polysilicon and solar grade silicon outlook
Regarding polysilicon, I said:
I’ll hazard to guess polysilicon spot prices will remain below $100 per kg in 2011 if solar companies plan to make profitable PV modules for declining FiT end markets. Long term polysilicon supply contracts are the only way to be competitive in the PV industry if you are not vertically integrated.
Well, my price prediction wasn’t bold, but my second statement has been disproven by contract cancellations and prepayment forfeitures in favor of polysilicon and wafer supply from the spot market.
The Photovoltaic Polysilicon Conundrum did resolve itself in the 4Q11 (fourth quarter of 2011) with polysilicon spot prices crashing below $35 per kg (kilogram) to $24 per kg with some reports from China as low as $21 per kg.
On the 2012 polysilicon outlook, Mr. Johannes Bernreuter, head of Bernreuter Research, said:
Even if only the four or five largest polysilicon manufacturers in China survive, the global production volume in 2012 could still be around 300,000 MT. So, there is continuing pressure to lower utilization rates or shut down production since 250,000 MT of supply should be sufficient even in an optimistic scenario. If the photovoltaics market should actually rise to 35 GW this year – the upper end of Trina’s forecast – I would expect the total polysilicon demand (including the consumption of the semiconductor industry) at approx. 280,000 MT.
I expect polysilicon spot prices will remain below $38 per kg in 2012 and may briefly dip below $20 per kg at some point later in the year as the largest polysilicon supply versus demand correction since the Internet bubble plays out.
Thin Film Photovoltaics
For thin film PV, I said:
In 2011, I eschew the CdTe (Cadmium Telluride) followers and assert MiaSolé and Solar Frontier are the thin film contenders to watch for signs of Second Solar emergence. I view Stion as a 2012 story.
According to GTM Research in “Who is the World Leader in CIGS Solar Shipments?” by Eric Wesoff, Solar Frontier emerged as the leading challenger to First Solar producing 577 MW (MegaWatts) of CIS (Copper Indium Selenium) thin film PV modules in 2011. Solar Frontier also marked 2011 with numerous installations and inked a 150 MW deal with enXco, Inc. to begin 2012. MiaSolé ranked third on the list with 60 MW of thin film PV module production although they are now seeking a partner.
At PHOTON’s 4th Thin Film Conference, Stion said the first 100 MW line is ramping to scale with commercial shipments starting in 1Q12.
Beyond the Solar Frontier, I’ll be watching Stion and strategic partner TSMC Solar Limited, a subsidiary of Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM), along with MiaSolé and the Solibro division of Q-Cells SE (FRA:QCE, QCLSF.PK) for a third thin film contender.
CSP (Concentrating Solar Power)
On the CSP front, I said:
In 2011, I predict another major southwestern US CSP project will fail because of legal or financing challenges or both.
Two days later, “Tessera / Stirling Sell Their Other Major Dish Project to a PV Developer” was the one of a number of CSP projects failing or switching to PV.
A review of the California Energy Commission list of Large Solar Energy Projects reveals glaring errors in the CPUC (California Public Utilities Commission) Status of RPS Projects (RPS_Project_Status_Table_2012_Feb_Final) spreadsheet. For example, the entry for the eSolar, Inc.Gaskell SunTower Concentrating Solar Power (CSP) project is listed as “Approved in Development” and “On Schedule”. Unable to recall the project being financed, I asked eSolar about the status, and eSolar was kind enough to respond:
eSolar sold the Gaskell land assets and is not aware of any development plans.
HCPV (High Concentration PhotoVoltaics)
In 2011, I said:
Instead of swinging for a CPV forecast strikeout, I’ll predict 2011 will be a record year for CPV start-up company failures as their funding runs out and investors lose patience with building better mousetraps while PV industry leaders like SunPower Corporation (
NASDAQ:SPWR) and maybe Trina Solar Limited (NYSE:TSL) decide to enter the medium and low Concentration PV market segments.
I don’t think Soliant suspending operations and being acquired by EMCORE Corporation (NASDAQ:EMKR) quite counts as a record year for failures. SunPower did launch the Concentrated Photovoltaic (CPV) C7 Tracker at SPI 2011.
“Solar Junction Wins $19.2M for CPV” by Eric Wesoff at Greentech Media said:
In 2011, two of the leaders in CPV, Amonix and SolFocus, commissioned 15 megawatts and 5 megawatts, respectively.
Amonix, Inc. completed the largest North American HCPV installation at 5 MW (MegaWatt) in Hatch, New Mexico USA, after an earlier 2 MW installation at the University of Arizona’s Solar Zone in Tucson, Arizona USA.
Amonix is supplying CPV systems for a 30 MWac (MegaWatt alternating current) project developed by Cogentrix Energy for Public Service Company of Colorado (PSCo), a subsidiary of Xcel Energy Inc. (NYSE:XEL) in Alamosa, Colorado USA. The project is supposed to be completed by 2Q12.
After the tragic loss of CEO Brian Robertson, Amonix faces a challenging 2012 PV market and the politically charged cleantech stimulus debate with headlines like “Some 200 laid off at North Las Vegas Amonix solar plant” by Aida Ahmed for the Las Vegas Sun. I know Amonix was developing the next generation 8700 system and saw the 8700 MegaModules installed on a test array at the Las Vegas manufacturing facility during a factory tour in November 2011. I had taken up Mr. Robertson’s open invitation to visit the facility when I knew my journeys would take me through Las Vegas. So I accept the retooling explanation and believe Amonix has already manufactured all the CPV systems for the Alamosa project.
2011 proved to be a banner year for Soitec SA (EPA:SOI) efforts in HCPV. Soitec has approved PPAs for 155 MW of CPV for San Diego Gas & Electric (SDG&E), a subsidiary of Sempra Energy (NYSE:SRE), and a 150 MW Tenaska CPV project PPA for SDG&E was also approved by the CPUC. Soitec crowned the year celebrating the purchase of its North American manufacturing facility in San Diego, California USA.
Venture capital investments continued to flow to CPV companies. GreenVolts and Semprius investors included ABB Technology Ventures and Siemens Venture Capital respectively, while Morgan Solar raised funds in part from Enbridge Inc. (NYSE:ENB).
By the way, the GreenVolts Byron project is listed in the CPUC Status of RPS Projects as “Approved in Development” and “Delayed”. As far as I know, the project has been completed.
I predict at least 100 MWp (MegaWatt-peak) of HCPV will be installed in 2012.
On Texas Tea of the petroleum variety, I said:
I do think an oil price spike is possible, but I predict oil will stay below $135 per barrel through 2011 barring a force majeure event.
2011 per barrel oil prices ranged from $85.66 to 113.08 per barrel across domestic and imported supply according to U.S. Energy Information Administration (EIA) data. The Roland Berger Strategy Consultants analysis indicates oil prices will fall between $97 and $120 per barrel based on the most reliable forecasts from oil exporters Mexico, Saudi Arabia, and Russia.
Once again I’ll predict oil will stay below $135 per barrel through 2012 barring a force majeure event including tensions with Iran over the country’s nuclear program. I don’t believe rumblings of oil prices dipping to $85 per barrel or even $70 per barrel unless the global economy tanks into recession.
PV Industry Shakeout
With increasing PV industry scale, supply, and price competition in 2011, I expect the number of failing PV start-ups and established manufacturers to accelerate. I predict Solyndra will manage to survive 2011.
A number of PV and solar firms failed, filed for bankruptcy, or were taken under in 2011. If Solyndra had just managed to hang on for another four months, my prediction would have come true. I wrote a number of posts on Solyndra before the implosion researching product and systems costs and asking Is the Future of Solyndra Flat?
Forget Solyndra, I think Solar Millennium filing for bankruptcy restructuring is the biggest solar shakeout story of 2011 and will be an ongoing saga.
As the PV industry shakeout intensifies in 2012, even more companies across the value chain will fail than in 2011. I predict at least one of the CIS/CIGS start-up companies listed in the PV Blog Poll will fail in 2012.
PV IPOs (Initial Public Offerings)
Rather than doubling down Las Vegas style, I’ll switch gears to product manufacturers and pick MiaSolé to IPO in 2011 (please see “MiaSolé Raising $100M and Preparing for 2011 Solar IPO”) and assume any legal issues will be resolved (“MiaSolé Fingered in Patent Suit”).
The IPO drought continued in 2011. While MiaSolé made steady progress improving module efficiency, the company switched CEOs late last year and began 2012 by announcing a 10% workforce reduction.
I don’t believe a western PV module manufacturer will IPO in 2012. Outright acquisitions or majority stake strategic investors are far more likely possibilities.
My 2012 “Out There” Prediction
I didn’t go “Out There” in 2011 so there is no grade.
In a multiyear “Out There”, I predict the General Electric Company (NYSE:GE) will either divest it’s majority investment in thin film PV manufacturer PrimeStar Solar or move production offshore by yearend 2014 when they come to their offshoring, portfolio theory, photovoltaic senses.
Please vote in the sidebar PV Poll: Which CIS/CIGS start-up companies will fail next (may choose up to 3)?
Sorry for the over promotion of this experiment in crowdsourcing. I’d like the RSS and email readers to vote.
DISCLOSURE: No position in any of the stocks mentioned.
Edgar Gunther is a photovoltaic enthusiast who researches and pens the GUNTHER Portfolio under the Photovoltaic Blogger moniker. The GUNTHER Portfolio is an eclectic collection of niche Blog posts about solar photovoltaic technologies, companies, industry developments, and occasional energy politics sprinkled with insight, analysis, and irreverent commentary.