Surviving The Shakeout : What Must US Solar Firms Do To Compete?

Transcription

1 Surviving The Shakeout : What Must US Solar Firms Do To Compete? Aditya Ranade, Analyst Presented at: SEMI North-East Forum Succeeding in Solar September 28, 2011

2 Lux Research Helps clients capitalize on science-driven innovation, identifying new business opportunities from emerging technologies in the physical sciences Provides both technology monitoring and market intelligence to support better business decisions Has clients on six continents blue-chip corporations, investors, government agencies, universities, and SMBs Sources our intelligence from direct interaction and onsite visits with CEOs and top executives at cuttingedge technology firms Has global reach, with over 60 employees in Boston, New York, Amsterdam, Singapore, and Shanghai Combines deep technical expertise with business analysis; 60% of research team holds advanced degrees in science or engineering Areas we cover Advanced Materials Alternative Fuels Bio-based Materials &Chemicals Electric Vehicles Green Buildings Printed Electronics Smart Grid & Grid Storage Solar Components Solar Systems Targeted Delivery Water China Innovation 2

3 Panic Strikes US Solar Industry with Solyndra, Evergreen and SpectraWatt Bankruptcies Building for Sale? Darrell Issa to probe government loan programs after Solyndra collapse Evergreen Solar Files for Chapter 11 Reorganization Agrees to Sell Assets in a 363 Asset Sale 3

4 But Some US Firms and Regions Have Found Ways To Compete First Solar s Factory On Schedule In Arizona SolarCity Primed to Hire 1,000 After Signing Billion-Dollar Deal For Military Roofs Spanish solar firm chooses Napoleon for first U.S. plant 4

5 Agenda Shift in global demand away from core European markets to North America and Asia Oversupply across the value chain will continue to push prices downwards Falling module prices will enhance IRRs in more US states, spurring installation Falling SREC prices will initiate decline in NJ installations. NY the sleeping giant of North-East Many supply-side opportunities in the North-East across the value chain and at all stages of development Conclusions 5

6 Subsidies! Initial paragraphs may be bulleted or not bulleted Use the Presentation Title and Content layout for on-screen presentations (see right) All presentation text should be 20pt Tahoma Bankrupt governments are slashing subsidies! 6

7 G8 Countries Account for 85% of 2010 Solar Demand They are also Broke CANADA: 82% of GDP, $38k per capita GERMANY: 77% of GDP, $27k per capita US: 66% of GDP, $32k per capita ITALY: 120% of GDP, $37k per capita JAPAN: 200% of GDP, $86k per capita Source: The Economist, 2010 Debt as a %GDP and Per Capita shows a grim outlook for continued taxbased solar subsidies in developed countries 7

8 European, North American IRRs Remain Strongest in 2011 Color IRR Not evaluated <0% 0% 5% 5% 10% >10% 8

9 Conditions Elsewhere and Continued Reductions Could Bring South America, Africa Online by 2014 Color IRR Not evaluated <0% 0% 5% 5% 10% >10% 9

10 Industry Revenues Dip and Recover to $65 Billion as ASP Declines Outpace Volume Growth in Short Term While solar continues to expand beyond the EU, the cost of growth is declining revenues short-term, as big emerging markets like the U.S., India and China require cheap panels to compete with cheap retail power $64.4 $60.1 $56.9 $58.7 $59.2 $62.3 $ $70 $ $50 Market Size (GW) $40 $30 $20 Revenues ($US billions) 5 $10 0 $ Volumes (GW) Revenues ($US billions) 10

11 Supply vs. Demand Figures Indicate Concerns of Oversupply in Tier 2 and 3 60,000 50,000 Module Production vs. Total Demand Megawatts (MW) 40,000 30,000 20,000 10,000 Tier 3 Tier 2 Tier 1 Demand Demand won t catch up to current supply levels till 2016, indicating a major shakeout among Tiers 2 and 3 for the next few years Source: Q Lux Research Supply Tracker 11

12 Seven Out of Top 10 Module Players Are From Asia Q Production Q2 Module Production First Solar 7% STP 6% JA Solar 6% North America 6% Rest of World 0% Trina 5% Europe 17% Other 54% Hanwha SolarWorld Solar One 3% 3% YGE 5% Canadian 4% Sharp 4% Jinko Solar 3% Asia 77% Source: Q Lux Research Supply Tracker 12

13 Survival Strategies US Firms are Adopting Be cost leaders- First Solar (production process efficiency, low-cost manufacturing) Find corporate investors with deep pockets- SunPower( Total), HelioVolt (SK), Ascent (TFG-Radiant) Play downstream- falling solar prices have meant greater IRRs in US- Installers are doing well: SolarCity, Verenego, Sunrun PolySi/Cell/Module Makers are playing downstream-sunpower, First Solar (RayTracker), LDK (Solar Power), OCI (Cornerstone Power Development) 13

14 U.S. IRRs Remain Most Attractive in the Southwest and Northeast Markets Color IRR Not evaluated <0% 0% 5% 5% 10% >10% 14

15 System Cost Reduction Pulls Mid-American States Into the Mix by 2014 Color IRR Not evaluated <0% 0% 5% 5% 10% >10% 15

16 North-East Demand Side Opportunities 2011 Projected New Installations (MW) Massachusetts New Jersey New York Pennsylvania Projected New Installations (MW) Even though current IRRs in New Jersey are the highest in the US, oversupply of SRECs will lead to significantly decreased demand Floor for SREC prices would save the day for Massachusetts installers New York is the sleeping giant of the North-East. Big potential for NYC due to high electricity prices and the building integration possibilities 16

17 Supply Side Opportunities: Important Clusters In North-East Research, Early Stage Development, Testing : CNSE: thin-film deposition, DOE sunshot funding for CIGS process development MIT: micro/nanopatterning, nanowires, QDs,3D printing, waveguides Fraunhofer CSE: Module Durability Testing, Testing New Non-actives Silicon Innovations: 1366, Bandgap Engineering SiOnyx 17

18 Supply Side Opportunities: Important Clusters In North-East Organic Printed Electronics: TCO/Barrier Films Corning Display Technologies MicroContinuum Polymeric Non-Active Components Madico (Backsheets), STR Holdings, Bayer (Encapsulants) Equipment and Consumables GT Solar Sixtron advanced materials Voltaix 18

19 Outlook North-east US can leverage its unique human capital and research capabilities by leading early stage development of innovative technologies Global shift away from core solar markets in Europe to emerging markets in North America, Asia and the rest of the world Oversupply in modules will continue to push prices down across the value chain US solar firms can still compete by being cost leaders, expanding market access to Asian countries and engaging in downstream project installation in US US poised to become a major solar PV market as decreasing prices bring many states to attractive IRRs by This bodes well for installers, project finance and EPC firms 19

20 Thank you! Questions? Aditya Ranade Analyst