PV Market & Industry Status and Vision on PV Business Models · PV Market & Industry Status and...
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12 February 2019
PV Market & Industry Status and Vision on PV Business Models
Advanced Intelligence & Research on Solar PV
by Philippe Macé, Senior Analyst, Becquerel Institute
PV Market & Industry Status and Vision on PV Business Models 2
Becquerel Institute at a glance
• Est. 2014 in Brussels, Belgium
• Applied research institute and strategic consulting company
focusing on solar PV technologies and their
• Global PV Market Analysis including competitiveness and
economics
• Industry analysis including technologies as well as quality &
reliability
• Techno-economic modelling
• Integration into electricity systems (grids and markets)
• Customers in Europe, Asia, Middle-East, Africa, America.
• PV Market Alliance partner
3
Looking at the big picture: PV market & industry status
Today’s agenda
PV Market & Industry Status and Vision on PV Business Models
1
2
3
4 Conclusion & Outlook
Towards a new paradigm
A word on prices
4
PV market status
PV Market & Industry Status and Vision on PV Business Models
5
Saving the climate: our PV 10 years challenge !
PV Market & Industry Status and Vision on PV Business Models 6
Sources: IEA-PVPS & PV Market Alliance
0
20
40
60
80
100
120
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
GW
China America Rest of Asia Pacific Europe Middle East & Northern Africa Sub-Saharan Africa Rest of the World
Chinese declinecompensated byglobal growth
Evolution of PV capacity installed annually worldwide
An (almost) ever growing marketThe core of the global market shifted from Europe to Asia
Chinese starts to installmassively : 15 GW in 2015,then 34 GW and 53 GW
Decline of Italycompensated byglobal growthGermany & Italy
represented almost17 GW together
7PV Market & Industry Status and Vision on PV Business Models
China decided to limit its market – May 31 decision
o Due to the gap between supply and demand on the domestic market, PV module price steeply decreased in Chine but
also on the global market
→ Consolidation within the industry
→ Pressure for product differentiation
→ The expected market dip was not as strong as expected
Protectionist measures appeared on other major markets
o Quotas and decreasing tariff enacted in the US on cells & modules for a four-year period
o Safeguard duties of 25% imposed in India on solar cells imported from China & Malaysia
End of the MIP in Europe, with limited consequences, if any, on market trends
Main events in the global PV sector in 2018The most impactful one has been the Chinese decision, which had a clear and serious global effect
PV Market & Industry Status and Vision on PV Business Models 8
In a decade, the market was multiplied by a factor 15
From 6,6 GWp in 2008 to (at least) 98 GW in 2018.
Cumulative capacity reached 500 GW
Chinese market decreased by 17%. But the country
installed more than expected
Non-China markets reached 54 GW, from 46 GW in
2017
USA and Japan stable, while India slightly slowed
down.
44,0
11,0
8,4
8,0
7,0
4,4
4,3
3,8
3,81,6 1,6 1,5
China
USA
Europe
India
Japan
Latin America
Rest of Asia
Australia
Middle East
Russia and CIS
Turkey
Africa
Source: The PV Market Alliance
Preliminary estimations of globally installed PV capacity in 2018
Total: 98 GW
The PV market remained stable in 2018 despite political turmoilChina, and to another extent Asia, strongly dominated the market
PV Market & Industry Status and Vision on PV Business Models 9
Source: The PV Market Alliance
Preliminary estimations of PV capacity installed in Europe in 2018
The European PV market is gaining momentum – again Mature markets such as Germany and France lead the way, while new ones remain strong
Growth of approximately 25% year-on-year
Europe (EU+) reached almost 9 GW
Germany still leading, thanks to its utility-scale
market
Market is growing in spite of the reduction of
support schemes
2,8
1,3
1,0
0,5
0,4
0,3
0,3
0,3
0,2
0,2
0,2
0,20,1
0,7 Germany
Netherlands
France
Hungary
Italy
Belgium
Switzerland
UK
Austria
Spain
Poland
Sweden
Portugal
Other EU
10
Belgian is also steadily increasingBut the market remains far away from its golden age
Boom 2009-2012
Fast declining system prices
Too generous subsidies
Market crashed in 2013
Followed by 5 years of growth
More than 4 GW cumulative capacity
366 Wp/capita. Only Germany (514) and Japan
(390) are higher
PV Market & Industry Status and Vision on PV Business Models
Annual and cumulative PV capacity in Belgium
Source: IEA PVPS
PV Market & Industry Status and Vision on PV Business Models 11
Sources: PV Market Alliance
Forecasts of PV capacity installed annually in the world
An (almost) ever growing marketThe core of the global market shifted from Europe to Asia
0
50
100
150
200
250
Low High Low High Low High Low High Low High
2019 2020 2021 2022 2023
GW
Europe Middle East & Northern Africa Sub-Saharan Africa China Rest of Asia Pacific America Rest of the World
Risk of global market decline
exists in 2019 if Chinese market
decreases but it is unlikely: 2020
target is being reviewed.
Market above 110 GW is a
credible forecast, with potential
until 120 GW (high probability),
or more (lower probability).
EU, India, Middle-East, and more
will be source of growth.
Market diversification with
innovative applications and… new
business models
200 GW yearly market?
Pricing of PV components
PV Market & Industry Status and Vision on PV Business Models 12
13
Module production capacity increased sharply in 2018 Despite lower than expected market developments and the risk of overcapacity
Global production capacity kept increasing
in 2018: expansion plans of various major
PV players
Threat of offer/demand unbalance if PV
market does not grow
Small players with suboptimal
manufacturing technologies and limited
distribution channels will struggle.
Source: RTS Corporation (production capacities), The PV Market Alliance (market numbers)
0
20.000
40.000
60.000
80.000
100.000
120.000
140.000
160.000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
MW
p/y
ear
PV INSTALLATIONS
TOTAL PRODUCTION
TOTAL PRODUCTION CAPACITY
Global PV Modules Production & Capacity
PV Market & Industry Status and Vision on PV Business Models
PV Market & Industry Status and Vision on PV Business Models 142017
0,20
0,30
0,40
0,50
0,60
0,70
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2015 2016 2017 2018 2019
201
9 U
S$/W
p
Multi cSi Mono cSi
Price instability due touncertainty regarding USdecision on section 201
Productionovercapacities
Effects of Chinese decisionand trade barriers
Strong demandfrom major markets
Market stabilization
Signs of price stabilization?
Evolution of module prices – End of quarter average spot prices
Average PV modules prices are now close to 0,2 US$/WpModules initially intended to be sold in China have overwhelmed the global market
Source: Becquerel Institute
PV Market & Industry Status and Vision on PV Business Models 15
High-efficiency products’ prices are plunging as well Although, the decrease of prices seems to be cooling down
Demand for high-efficiency products was stable and was
even reinforced on various markets.
In China, this can be explained by the “Top-runner
program” and in other markets, by an increased appetite
for qualitative products.
Production capacity of PERC modules is increasing very
fast and stands today 60 GW.
Price stabilization:
Tier-2 manufacturers who have been panicking since 31/5 decision, and
fire-selling their modules have now emptied their inventories.
Some of them already stopped or strongly reduced their activities.
Market decrease has not been as strong as expected.0,20
0,30
0,40
0,50
Q3 Q4 Q1 Q2 Q3 Q4 Q1
2017 2018 2019
2019
US$
/Wp
Multi cSi PERC
Mono cSi PERC
Evolution of module prices – End of quarter average spot prices
Source: Becquerel Institute
PV Market & Industry Status and Vision on PV Business Models 16
0,039
0,032
0,059
0,0530,053
0,085
0,1260,126
0,126
0,2500,238
0,211
0,00
0,05
0,10
0,15
0,20
0,25
0,30
Fully integrated: Si at lowest spot price Start point: Wafer at lowest spot price Start point: Cell at lowest spot price
US$
/Wp
Polysilicon Wafer Cells Module Total
Manufacturing cost of multicrystalline silicon modules at factory gate – Lowest market spot price
-4,7%
-11,3%
PV components’ market spot prices create turmoil The ability of vertically integrated PV companies to maintain their competitive advantage is challenged
Overview of what can be potentially
reached, in the best case, by module
manufacturers in function of their level of
vertical integration.
If prices are lower than computed
production costs, what could happen?
But average selling price is higher than the
lowest prices: these latter are only
representative of the situation of a minor
share of the market, i.e. super competitive
tenders
10 GW is the new normal, but are vertically
integrated factories the absolute must ?
PV Market & Industry Status and Vision on PV Business Models 17
PV module prices could be below 0,10 €/Wp in Europe by 2030But history has shown that price long-term price trends are unpredictable
Source: ETIP PV
Long-term evolution of PV module prices in Europe
PV Market & Industry Status and Vision on PV Business Models 18
< 10 GWp of the PV capacity installed
worldwide at the most competitive
system prices, i.e. around, 0,6
US$/Wp.
Other utility-scale installations:
reduced price but not as low.
Rooftop PV: higher but can go below
1 US$/Wp, in best cases.
Residential segment: can hardly go
below 1,1-1,2 US$/Wp. Overall, this is
the segment with the most
heterogeneous price ranges.
Final prices of systems are highly uneven across the global marketOnly a minor share of the PV installations is installed at the record low-prices making the headlines of the news
Super competitive tenders
(increasing) & competitive PV
Utility-scale under FiT/FiP
Rooftop PV under self-
consumption
Off-grid & others
/Wp
Source: IEA PVPS, Becquerel Institute
Rooftop PV under net-
metering or FiT
PV Market & Industry Status and Vision on PV Business Models 19
Solar PV electricity below 0,02 US$/kWh ?Even in Europe solar PV energy price can be on a par with wholesale market prices
0,0168 US$ per kWh
0,038 € per kWh
PV Market & Industry Status and Vision on PV Business Models 20
Monthly wholesale electricity prices: range of maximum & minimum prices
Source: European Commission
Solar PV electricity below 0,04 €/kWh ?Even in Europe solar PV energy price can be on a par with wholesale market prices
Business models in PV:towards a new paradigm
21PV Market & Industry Status and Vision on PV Business Models
PV Market & Industry Status and Vision on PV Business Models 22
44,562,3
78,294,3
112,2132,0
169,1
25,5
37,4
58,4
81,2
113,9
170,0
231,4
0
50
100
150
200
250
300
350
400
450
2011 2012 2013 2014 2015 2016 2017
GW
Grid-Connected Decentralized
Grid-Connected Centralized
Cumulative global PV capacity – Segmentation of grid connected installations
Source: IEA PVPS
2018? A large-part of the global growth was in
the utility-scale segment, especially in
emerging markets
Market segmentation has been dominated by
utility-scale PV plants in the last 6 years, with
a change coming from China in 2017.
Innovative applications still marginal:
Floating < 1 GW
BIPV < 1 GW
AgriPV is new and growing slow
VIPV is still in its infancy
Different business models for different applicationsDistributed (decentralized) PV has become minor compared to centralized PV systems
PV Market & Industry Status and Vision on PV Business Models 23
Distributed PV
Centralized PV
Inverter
10556
5250
28600
Prosumers
Producers
Grid injection, PPA, competition with
electricity generationbusiness of utilities
Self-consumption, energy effiency, gridparity, competition withutilities’ distributionbusiness
One technology
Different business models for different applicationsEach segment has its own competitive environment
PV Market & Industry Status and Vision on PV Business Models 24
Prosumers…Here and now
(again)
Distributed PV is highly dependent of regulation…… and its unexpected changes
Self-consumption of PV installations:
From 30% (or less…) to 100%
Challenge: minimizing grid injection
Solutions: decrease PV system size, DSM, Storage0
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PV prod
Consum
Grid consumptionSelf-Consumption
Grid injection
Distributed PV business models need to rely on self-consumptionAnd to be competitive against retail electricity prices
PV Market & Industry Status and Vision on PV Business Models
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PV prod
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Grid consumptionSelf-Consumption
Grid injection
DSM Electricity Storage Other uses(out of the load)
H&C, Transport
Distributed PV business models need to rely on self-consumptionAnd to be competitive against retail electricity prices
But is local maximization of SCoptimum from a system point of view ?
PV Market & Industry Status and Vision on PV Business Models
• What are the fixed and variable parts of the electricity bill?
• How much can be compensated from the electricity bill ?
99%
98%
97%
97%
97%
97%
97%
97%
96%
94%
85%
83%
79%
Italy
Turkey
France
Belgium
Netherlands
Switzerland
Portugal
UK
Poland
Denmark
Austria
Germany
Spain
Focus on profits from electricity bills savingsCompensability of retail electricity prices impact PV profitability
Source: IEA PVPS
Maximum savings on electricity bills in 2017 (average)
PV Market & Industry Status and Vision on PV Business Models
Grids are mostly financed on an energy basis, but
their deployment is capacity-based.
Average Energy/capacity tariffs in Europe depends
on country and segment.
How to adapt to PV development ?
Increasing self-consumption can be a threat for grid financingA capacity-based infrastructure financed through energy demand
Grid tariffs depend on policy choices
Most countries so far: Grid costs to be paid on the
really consumed electricity
Belgium: prosumer’s tariff =~ grid costs for prosumers round 80-
90 EUR/kWp (but net-metering)
Spain: Sun tax – same idea, different application Just removed !
Italy: “scambio sul posto” – but favourable to PV
Many discussions about net-metering in the USA
PV Market & Industry Status and Vision on PV Business Models
PV Market & Industry Status and Vision on PV Business Models 29
Example of innovative BM: “collective” self-consumptionFrom isolated prosumers to communities of energy prosumers and consumers
New regulations are being developed in various
Member states to be in phase with the new
European directive → allow local energy
communities
France at the forefront: regulation has been
existing for more than 1 year already but… limited
deployment due to the complexity of the scheme
Netherlands also: “postecoderoos” regulation
Austria & Germany: only withinin the same
building
PV Market & Industry Status and Vision on PV Business Models 30
Virtual self-consumption(wider areas)
Virtual self-consumption
(district)
Collective self-
consumption
Local self-consumption
Grid costs paid for consumedelectricity and mutualized for self-
consumption
How to share energy? Grid costsmanagement similar.
Remuneration of the distribution gridnecessary
Remuneration of the transmission grid necessary
Source: TU Wien & Becquerel Institute
Towards an expanded self-consumption conceptA new paradigm will develop, helped by innovative “smart” technologies
Utility-scale plant to power public buildings in
cities
Virtual compensation between buildings in
the same city
Charging EVs in the office with PV electricity
produced at home (or the opposite)
Storage, EV, PV, H&C in buildings, connected
and exchanging electricity.
Conclusions and short-term outlook
PV Market & Industry Status and Vision on PV Business Models 31
PV Market & Industry Status and Vision on PV Business Models 32
With a stable PV market (even slightly growing), the pressure on the prices will continue to be high: overcapacity threat
Consolidation in the industry has already started.
Costs will continue to go down, but prices are already making PV competitive in many segments and countries.
Increase of trade duties will temporarily slow down some specific PV markets → shift to new markets
Market resilience of the PV market was higher than expected!
Medium-term potential for at least 200 GW a year
The revolution has just started…
From simple modules to BIPV, roads, floatting PV, urban furniture, cars, trains, planes…
PV will be the CHEAPEST source of energy in this century.
The grid must adapt to new uses and is not a definitive concept
Solar PV will keep strengthening its position Decreasing prices, new applications and innovative business models
PV Market & Industry Status and Vision on PV Business Models 33
« PV is not the source of electricity of the future…
… it is already a reality today »
PV Market & Industry Status and Vision on PV Business Models 34
Let’s not miss the next step in evolution !
CONTACT
Philippe Macé, Senior [email protected]
or
www.becquerelinstitute.org
THANKS FOR YOUR ATTENTION