Sarasin: PV profitability down, but resilience evident

These were the conclusions of Bank Sarasin’s latest study, titled ‘Solar industry: entering new dimensions’.

The bank’s Sustainability Research department, which published the findings, added that newly installed capacity has shown impressive growth this year, having increased by 87 percent. It cited cost-cutting and efficiency improvements as key reasons for this. As a result, it says the average global growth rate for the period up to 2015 is estimated at 33 percent per year “albeit with significant variations in the rates achieved by different countries from one year to the next”.

However, the study found that the sharp fall in PV module prices has “left its mark” on profit and loss accounts, and the negative stock market performance of solar energy companies.

In terms of electricity contribution, the study stated that global solar energy capacity has now passed the 30 gigawatt (GW) mark. This, it said, is enough to supply 10 million households with clean electricity. Furthermore, it said that the amount of newly installed capacity this year in many markets comes as a positive surprise, having reached a total of 13.8 GW.

Markets

While the study found that Germany and Italy are still two of the most attractive PV markets – both for rooftop PV and larger ground mounted systems – it said that a number of markets will drive the industry’s expansion, with newly installed PV capacity exceeding 500 megawatts (MWs) per annum. These include France, Italy, Spain, the U.S., Canada, China, India and Japan.

In general, it added, the non-European markets with plenty of sunshine will tend to grow more rapidly up to 2020, as they have “more ground to make up” in the area of solar energy.

The study found that Italy rose to become Europe’s second largest PV market last year, with 720 MWs of new capacity: this year total new capacity will be in the region of 1.35 GWs. Germany, on the other hand, is said to be experiencing another boom phase this year. By the end of 2010, newly installed PV capacity is set to reach around 6.9 GWs.

Alongside the established markets, it was found that there are other promising PV markets such as Brazil, Indonesia, South Africa, Thailand, Turkey and other developing and emerging economies, which offer “enormous” potential for solar power. These countries are seeing strong demand for low-cost compact systems for generating electricity and light, said the study. It added that the these off-grid PV systems (solar home systems, or SHS) will soon become affordable for the rural population.

Under pressure

In terms of prices, the study reported that pressure will continue to rise “significantly”. This, it said, is in response to the announcement of further FIT reductions next year. Consequently, it expects PV module prices to drop by between 10 and 20 percent per year.

In a statement, it said: “Falling prices have put pressure on companies’ margins, but not to the same extent for all cell and module manufacturers. Figure 1 shows the development of the EBIT margin of six leading solar players for the period 2006 to 2012. The reasons for this development are to be found in the rapid increase in the number of providers and the associated expansion of production capacities.

“The solar industry is therefore rapidly developing into a mature industry with competitively priced mass production. This is reflected in the current stock market valuation of solar companies, which have slipped back to the same level as mature industries such as semiconductors and electronics.”

Thin film gains

In terms of the thin film sector, the Bank Sarasin study said that thin film PV (TFPV) modules are expected to account for 18 percent of total PV production volumes: this should increase to 30 percent by 2012. It added that within the TFPV technologies, copper-indium-gallium-diselenide (CIGS) technology is set to enjoy “superior” growth of around 100 percent per year.

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