Asian markets will be the bright spots for solar
The global solar industry has had a bumpy year. But while it is likely to face further challenges, there are also opportunities on the horizon, agreed participants at a Solar Leaders dialogue on...
Suntech founder Dr Shi Zhengrong believes that with solar energy having reached grid parity in many countries, the industry will continue to expand.
The global solar industry has had a bumpy year. But while it is likely to face further challenges, there are also opportunities on the horizon, agreed participants at a Solar Leaders dialogue on Tuesday.
Describing business sentiment towards the current state of the industry, Dr Shi Zhengrong, the founder of Suntech, the world’s largest solar panel manufacturer, said: “The market went from nothing, to huge, to a crash. Very few manufacturers are making money at the moment.”
Indeed, after peaking at 32 GW installed photovoltaic (PV) power in 2012 – and taking the total installed base to 100GW - the combination of lower levels of government support, excess production capacity and more recently, anti-dumping rulings seemed to have conspired to make 2013 a challenging year. But while the traditionally large European markets have stalled, Asian markets have been growing, leaving industry participants hopeful of a brighter future.
“Last year alone China installed 10GW of solar PV,” said Dr Shi, in a discussion panel on global photovoltaic developments and trends.
While China’s transition from exporter to end-market user will drive a huge portion of the expected long-term growth in the industry, it is not the only Asian market drawing attention. Japan is also seen as a big opportunity by many, with the Fukushima incident resulting in a groundswell of support for renewable energy.
Mr Alex Lenz, President of Asia and the Middle East for Conergy, a German-based solar company, said his firm saw huge potential in Japan, but that “it is a challenging market to get into”.
South East Asia also presents significant opportunities, according to Mr Lenz. “Conditions for solar PV in South East Asia are almost ideal, “he said noting that while incomes were rising, so were electricity prices.
Significant off-grid opportunities also exist in countries or regions with less developed electricity networks. “There are about 100,000 villages in India without access to grid electricity. They are paying 25-30 cents per kWh to get their power from diesel generators when they could be paying 10-14 cents for power from solar”, explained Mr V. Saibaba, CEO of Lanco Solar. “There is also a 35,000MW opportunity for solar to replace diesel generation for telecom towers in India. This is a huge opportunity that doesn’t need subsidies to pay off.”
With markets around the world having become accustomed to low solar prices, the challenge for manufacturers is to find ways to restore margins without significantly raising prices. “Prices have stabilised, but gross margins are still very slim across the industry”, said Dr Shi. “In my view, manufacturers will need to become more specialised and focus on specific parts of the value chain in order to reduce costs and expand margins to sustainable levels.”
Concluding on a positive note, he said that the industry still has room for profitable growth. Dr Shi agreed, saying: “With many countries having already reached grid parity, there is no doubt that markets will continue to grow.”
BY : Martin Kennedy, INSEAD