Low Cost Solar PV Will Lead to Increased Development and More Jobs

As a result of the oversupply of solar PV panels in 2011 and 2012, costs were driven down significantly. This spelled bad news for solar PV manufacturers seeking to make decent returns or any returns at all, but led to increased opportunities for downstream providers to pursue large-scale solar developments, both within the major global markets and also developing countries that previously weren’t able to afford it.

Jigar Shah, partner at Inerjys Ventures, says this will continue and predicts “robust” global job growth in the solar industry in 2013. “The volumes are going to go up substantially next year,” Shah said. “The pricing signals that were provided this year were so low, that there’s at least 40 or 50 countries in the world who haven’t done a lot of solar who are earnestly looking at awarding contracts in the first quarter of next year and having construction completed by the end of 2013. You’re starting to see an extraordinary proliferation of solar based on the pricing that was indicated by manufacturers in 2012.”

Nat Kreamer, CEO of Clean Power Finance, agrees: “Just as over-investment in fiber optics led to inexpensive bandwidth, creating the foundation for the Internet economy we enjoy today, inexpensive solar modules are creating the foundation for explosive growth of the solar industry.”

Kreamer also said he anticipates more job growth in the U.S. downstream solar industry as the sector continues to grow, but added, “we believe consolidation among manufacturers will lead to fewer management and administrative jobs globally.”

With respect to the plummeting cost of solar panels, Kreamer says he doesn’t expect prices to continue to drop in 2013 as rapidly as they did in the last two years. “Over the long-term,” Kreamer said, “like other semi-conductor industries, we expect solar module cost to decline and efficiency to increase. Since modules today account for less than 20 percent of a solar system’s cost, solar generation competitiveness gains are likely to come from other parts of the cost structure, such as customer acquisition and permitting.”

Shah adds that most developers today are “not looking for price reductions,” citing significantly lowered costs as the primary reason. “The difference between getting a 70 cent a watt module and a 65 cent a watt module is just not that big of a deal anymore for system costs,” Shah said. “People are now looking at non price features for making decision on who to buy from.”

Little Impact Predicted from U.S. / Chinese Solar Cell Tariffs

The recently published U.S. Solar Market Insight Report, which was released by the Solar Energy Industries Association (SEIA) and GTM Research, states that the impact of tariffs imposed against Chinese solar manufacturer providers will be minimal, as they only apply to panels using Chinese manufactured solar cells – something that can be easily circumvented.

According to Shah, Chinese solar manufacturers will be virtually unaffected by the tariffs because of a pre-existing diversity in their solar product lines. “Today, the Chinese already diversify by using Taiwanese cells,” Shah explained, “so they’re just sending those Taiwanese cell modules to the U.S. instead.”

The SEIA report claims that “tariffs will not have a material impact on pricing in the U.S.” and goes on to explain that Taiwanese-obtained solar cells will come with a cost impact of less than $0.10 per watt.

Consolidation and Specialization Will Emerge in 2013

Although the industry has already begun to show signs of consolidation by way of numerous bankruptcies and the absorption of assets by larger solar companies, Kreamer sees this as a trend that’s likely to increase into 2013. He also predicts fewer all-in-one corporations and a more widespread distribution of supply chain services.

“We expect module manufacturers to consolidate to achieve economies of scale,” Kreamer said, “and downstream companies – which sell, install and finance solar – to create comparative advantage by focusing on what they do best. For example, companies like Paramount Energy are outstanding at acquiring consumers and work with best-in-class contract installation companies, using financing provided by specialty financing companies, on Clean Power Finance’s online marketplace.”

Saudi Arabia Makes Inroads to Solar Dominance

According to Marc Norman, lawyer for Chadbourne & Park LLP and director of the Emirates Solar Industry Association (ESIA), the official launch of Saudi Arabia’s plan to procure 54,000 MW of renewable energy capacity by 2030 is due to take place in the second quarter of 2013. The first step will be an introductory procurement round for up to 600 MW of solar power facilities and 100 MW of wind power.

“This initial procurement program is poised to be officially launched in Q2 of 2013,” Norman said. “There will be six solar projects and one wind project, located in seven different prepackaged sites. Each facility is set to have a capacity of approximately 100 MW. The request for proposals are due to be issued in the second quarter of 2013.”

The announcement of Saudi Arabia’s renewables procurement program came as a surprising move. The program is being deployed in response to projections that continued use of Saudi Arabia’s own oil resources could make the country a net oil importer by 2030. It is also seen as a means to combat the country’s high unemployment rate, which has hovered at over 10 percent for the last few years.

“The Saudis see this as an opportunity to create a center for excellence for solar energy globally,” Norman said, “and as a means to stimulate employment in the Kingdom. This is going to be a massive game changer for the global renewables industry, and particularly solar power. This is one of the biggest global developments of 2012, and it will be on the radar of every industry player in 2013.”

Emerging Markets Will Bring Global Solar Industry Stability

The recently released IHS Solar Emerging Markets Study predicts that emerging markets in Asia Pacific, Latin America, the Middle-East, Africa and “emerging Europe” will help strengthen the solar industry, beginning in 2013. The report indicates that up to 30 GW of PV capacity will be added throughout various emerging markets in the next four years, helping to stabilize an industry that’s steeling itself against the elimination of critical incentives in several European markets. It says that 2.1 to 3.5 GW of new PV capacity will be added in 2013 alone.

The report identified South Africa, Thailand, Chile, Romania and Brazil and five of the “most appealing” emerging markets for solar development. The next most appealing markets, according to the report, were Argentina, Ecuador, Turkey and Mexico.

Will 2013 Shape Up to Be a Watershed Year?

Possibly the most sobering prediction for 2013 comes from Norman, who views the aforementioned steps being taken by Saudi Arabia as a sign that the global solar pendulum may be moving in a new direction.

“At the moment,” Norman says, “the U.S. and the E.U. are going through difficult times. Renewable energy is still more or less a luxury, and a quite expensive one. But if you look at what’s happening in the U.S. with the revolution in shale oil and shale gas, you may see the development of renewable energy adversely affected. Ultimately, you’ve got something there that’s readymade, that’s cheaper, and that may be a massive opportunity for the U.S.”

Citing a rising tide of interest in renewable energy in the Middle East and economic worries in the U.S. and throughout Europe, Norman says, “They’re like opposing worlds. One side is slowing down, and the other side is gearing up – rising.”