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Trading places: Emerging markets move to <strong>the</strong> forefront<br />
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http://research.stlouisfed.org/fred2/series/TWEXBMTH<br />
Markit Economics<br />
Chart 3. Chart 4.<br />
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Markit Economics<br />
Markit Economics<br />
Chart 5. Chart 6.<br />
Mixed messages: demand<br />
records versus diminishing<br />
margins<br />
The solar market has sent mixed messages<br />
over <strong>the</strong> past couple of years with repeated<br />
records in installation and production<br />
which was contrasted with pricing degradation<br />
which originated from OEMs<br />
failing to differentiate <strong>the</strong>mselves in an<br />
ultra competitive, global market place.<br />
A housing market recovery may provide<br />
opportunities for BIPV products despite<br />
<strong>the</strong> growing division between distributed<br />
solar power and <strong>the</strong> utility companies.<br />
2013 is on track to break more installation<br />
records as mega-utility installations<br />
dominate total installations. Presently,<br />
<strong>the</strong>re are over 2.5 GW being installed in <strong>the</strong><br />
top ten global installations. Non-residential<br />
installations continue to attract schools,<br />
military bases, manufacturing plants,<br />
distribution facilities and retail outlets,<br />
which are benefiting from shortened ROI<br />
benefits. The third leg on <strong>the</strong> installation<br />
stool looks to be recovering as regions<br />
implement mandates for adding solar to<br />
all new residential construction and home<br />
builders use alternative energy to differentiate<br />
from competitors.<br />
Signs of recovery and<br />
sustainability<br />
Polysilicon demand is also showing some<br />
signs of life in regions that are benefitting<br />
from tariff reduced imports, facility<br />
closures and <strong>the</strong> retreat from vertically<br />
integrated manufacturing models.<br />
More manufacturing is being shifted to<br />
EMS companies such as Celestica (Chart<br />
8), Jabil (Chart 9) Flextronics (Chart 10)<br />
and Hon Hai/Foxconn (Chart 11) as OEMs<br />
look for ways to boost depleted margins.<br />
Flextronics was <strong>the</strong> 7th largest module<br />
manufacturer in 2012 and it achieved 60%<br />
y/y growth (<strong>the</strong> largest growth of all manufacturers)<br />
in solar module production with<br />
900MW produced. In addition, Hon Hai<br />
plans to raise its annual solar panel production<br />
capacity from about 30 MW in 2012<br />
to 400 MW and its subsidiary, Fox Energy<br />
manufactured 350 MW of solar panels for<br />
MEMC in Juarez, Mexico.<br />
IHS believes that global photovoltaic<br />
module production is expected to grow<br />
18% y/y to over 37 GW in 2013 (Chart<br />
12) but prices are expected to fall fur<strong>the</strong>r<br />
resulting in fur<strong>the</strong>r margin contraction.<br />
<strong>Solar</strong> photovoltaic module revenues are<br />
expected to decline 20% in 2013 to $20.5<br />
billion and <strong>the</strong>n grow to $32 billion by<br />
2017 according to NPD <strong>Solar</strong>Buzz who<br />
does not see a (pricing) recovery until<br />
2015. As a result many companies have left<br />
<strong>the</strong> industry and venture capital investments<br />
decreased from $91.6 billion in 2011<br />
to $79.7 billion in 2012 according to Clean<br />
Edge.<br />
Give it time<br />
2013 is heading towards <strong>the</strong> 34-38 GW<br />
range (Chart 13) depending on economic<br />
drivers with Germany, China, Japan and <strong>the</strong><br />
U.S. vying for crown for largest installation<br />
www.globalsolartechnology.com<br />
<strong>Global</strong> <strong>Solar</strong> & Alternative Energies – May/June 2013 – 13
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