First day of Asia Solar highlights solar survival strategies21. March 2012 | Global PV markets, Industry & Suppliers, Markets & Trends | By: Becky Stuart
The slowdown of the global solar industry is expected to continue well into this year. The need to understand this "crisis" is crucial, according to the experts, who spoke at the first day of the 7th Asia Solar 2012, in Shanghai, China. Overcapacity, meanwhile, is expected to again dominate discussions, while prices will continue to fall. China's FIT was additionally criticized.
In comparison to Solarcon, which kicked off yesterday, the exhibition hall on the first day of Asia Solar was bustling with attendees, who eagerly visited the impressive-looking company stands. As one exhibitor remarked, in addition to the higher numbers, the difference in the quality of the visitors between the two shows was also noticeable.
In its conference, which was moderated by pv magazine Chinese edition's managing editor, Eckhart Gouras and addressed the trends and challenges facing the solar industry this year, research-body, EuPD noted that in order to cope with the industry crisis, it is crucial to understand how it is to be faced.
React or quit
CSUN CEO, Stephen Cai took to the floor to offer his perspective on the upcoming challenges. In his presentation, titled, "Be high efficiency, be diversified, or quit – How to face the crisis in Europe and the U.S.," he noted that overcapacity will continue to dominate this year. The problem was first triggered, he said, by the two months of indecision in Italy last year by the country's government over its solar subsidies, which caused great uncertainty.
He added that due to the European financial crisis, subsidy reductions are occurring faster than both cost reductions and technological advancements. This is a "painful stage" he commented, which will last for between one and two years.
"Where do we go from here?" he asked the packed audience. "How can we survive?" In response to his own question, Cai presented four key strategic business developments, which need to occur, if companies are to weather the solar storm: (i) higher efficiencies; (ii) downstream investment; (iii) global operation; and (iv) diversified channels.
Higher efficiencies, he stated, are a "must". A lot of work in this area still needs to be done, he believes, and the bar raised for industry standards. He explained that between June 2011 and January 2012, monosilicon cell efficiencies increased from 18.1 to 18.4 percent, and polysilicon cell efficiencies rose from 16.3 to 17 percent. Concluding, he stated that efficiency equals low cost, and that low cost equals efficiency.
Talking about downstream investment, Cai said that it is "quite simple" to find projects in developing markets like India, Australia – "don't underestimate Australia," he stated – South East Asia, Africa, South America and the Middle East. He did acknowledge though the difficulties that can be encountered in terms of securing financing.
In terms of global operations, "if you don't have a world view", he further stated, "you will find it hard to do business." The government will not subsidize the solar industry forever and, as such, it is imperative that companies focus on the customers, in order to mitigate the risks.
Finally, Cai said that it is necessary to have a diversified channel, whereby companies focus on the global community and develop channels in different regions. The rooftop market, which typically boasts higher subsidies, off-grid solutions and emerging markets are the way forward.
"If you can do one, you will survive. If you can do all four, you will succeed," he stated.
As the industry is well aware, rapidly falling costs plagued many manufacturers in 2011, as a result of the overcapacities. According to Cai, this year will be no different. He provided an analysis on each quarter (Q), as follows:
- Q1 2012 - Average module prices will drop to €0.63 per Watt; there will be low inventory, but a pick up in March will be seen.
- Q2 2012 - Average module prices will drop to €0.60 per Watt; inventory will be "higher and higher".
- Q3 2012 - Average module prices will drop to €0.58 per Watt; inventory will peak and utilization will be full.
- Q4 2012 - Average module prices will drop to €0.55 per Watt; inventory will drop and there will be an inventory peak.
In his presentation, China's New Energy Chamber of Commerce (CNECC) vice secretary, Wang Hui, stated that while the introduction of the national feed-in tariff (FIT) last July was a "landmark event", the policy must be further perfected. Particularly, the price and time period of the FIT is still not clear. He went on to say that for different regions within the country, there are different levels of solar irradiation. Therefore, a "one-size-fits-all" policy is not suitable.
He added that grid capacity is also problematic, and that there are already problems with connecting China's wind energy to the grid. As such, there is a need to plan for new energy development.
As already reported, many domestic players are concerned about the grid issues in China. pv magazine learned today from sources who wish to remain anonymous, that while 2.89 gigawatts worth of photovoltaic projects were built in the country in 2011, under half have actually been grid connected. Furthermore, it could be likely that many will never be connected, and many will be classed as "test" installations for the various provinces.
It was also interesting to note in the vice secretary's presentation, that he only mentioned grid connected photovoltaic capacity in 2010 in China – 800 megawatts, which "caused an impact" – and failed to talk about 2011's figures.
The anonymous source further explained that China's photovoltaic industry is expected to see lots of change in 2012, most of which will be positive. For instance, the central government is said to be working on a set of standards, including for planning and checking which, when complete, will be valid for the whole country. While the process of setting the standards is not said to be particularly transparent, due to the cautious nature of the government, the move is a positive step forward for the fledgling industry.
Asia Solar 2012 is hosted by the CNECC, the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME) Solar & Photovoltaic Products Branch, and the China Council for the Promotion of International Trade (CCPIT). It will run until Friday 23, March.
Watch out for more trade show news tomorrow.
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