‘The Business Case for Building Integrated Photovoltaics', published by NanoMarkets says the solar panel market is entering a new phase of its market evolution; "a phase where it will face three extraordinary challenges". These are defined as: (i) disappearing solar subsidies; (ii) the contraction of the environmentally-conscious consumer market, due to "difficult" economic circumstances; and (iii) the commoditization of PV panels.
In light of these challenges, the research company says BIPV presents a promising strategy for the solar panel industry. "The combination of commoditized products and shrinking traditional products is not an attractive environment for solar panel manufacturers to make money ( )," explains the report. "However, NanoMarkets believes that PV may not only be ‘saved' by BIPV, but may actually flourish. What BIPV does is to bring an entirely new value proposition to the PV market both in terms of cost and in terms of aesthetics. And a result, BIPV promises the PV industry an opportunity to create new higher value products."
While NanoMarkets believes commoditization is not favorable for most companies, it does recognize that some panel makers will benefit from the situation. For example, it says low-cost Asian suppliers, companies that can tap into large economies of scale, or firms with access to extensive cut price distribution channels may well be "thrilled" by the current market environment, seeing it as a way to clear out the competition.
"Obviously – and almost by definition – such firms are fairly few and far between. By using low-cost labor or having high-volumes counter low gross margins, such firms can still be profitable," says the company. "These comments don't apply to most panel firms though and we believe in 2011 and for the next few years, solar panel makers will be desperately seeking new ways that can serve as a deterrent to having to compete on price."
The report goes on to say that BIPV cuts through the boundaries that have existed between building materials and solar panels, thereby both expanding the solar panel market and creating the potential for novel hybrid products that are both solar energy sources and cladding, roofing, windows, etc. "These hybrids both radically change the cost models for solar and also create the need to rethink the value proposition that solar panels of the BIPV kind can bring to the table. In particular, for first time BIPV will enable PV panels that will be judged on their architectural merit and not just on functionality," continues the report.
According to NanoMarkets, BIPV presents two ways out of the commoditization problem: aesthetics; and movement away from the basic return on investment (ROI) equation.
The company says that BIPV offers a much more attractive solar panel product, which is likely to expand the market, thus pushing consumers who have seriously considered solar but don't like the current look of panels, into investing in it. "This," it says, "is exactly what the PV industry needs at a time when its traditional markets are most likely to slow significantly. In addition, since refocusing on aesthetics opens up possibilities for solar panel firms to compete on something other than price, it represents a strategy to move beyond the commoditization problem and for panel firms to distinguish themselves in the marketplace in a way that will help lift margins."
Furthermore, the improvement in solars aesthetic appeal will help consumers to look beyond basic ROI. According to the report, BIPV introduces a new way of allocating PV costs, since it shares them between PV and the building products.
"With conventional PV, the consumer must in some appropriate way match the cost of the panel against likely reduced costs in the future. With true BIPV – where integration genuinely merges PV and building materials – consumers must consider the cost of both the panel and cost reductions from (say) substituting a solar tile for a conventional tile.
"In particular, the BIPV concept looks forward to a day when PV capability could be had for a small premium on the cost of conventional tile, siding, glass, etc. This potentially changes the entire value proposition of PV and (once again) creates many new ways for panel firms to distinguish themselves and create entirely new products," says NanoMarkets.
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