An Overview of the Photovoltaic Industry part 1
Changes in PV (Photovoltaic)
By Daniel Duffield
Some very unique circumstances have enveloped the US photovoltaic industry over the last 8 years. This industry also is somewhat unique, in that unlike manufacturing appliances or automobiles, there is an entire installation service industry associated with it. Further, these systems have to be integrated in full compliance to the local permitting authorities and with full cooperation with the local electric utility, with all of these additional associated plan set authoring, examination review and approval costs.
- The US photovoltaic electrical systems market was incentivized via a 30% federal tax break, When other industries suffered from the US 2008 banking debacle, many businesses jumped into this industry with both feet to take advantage of the stimulated growth of products sales and services from this emerging new market. Some states also instituted an additional Person Income tax incentives or residential solar installations.
- In many states, the public utility regulation authorities imposed or adopted an (RPS) or Renewable Portfolio Standards – which demanded, coerced or requested that large investor (publically) owned, electric utilities produce – a small but significant portion of their power renewably from wind or solar electric. This led to local utility based, customer incentive programs for solar, with REC’s or SREC’s. These incentive credits have diminished over time, but certainly helped the industry as a whole – lower overall solar system deployment cost(s).
- The number of PV module manufacturers – first grew tremendously in number and then dropped off significantly due to attrition; because PV module pricing was repeatedly driven down – by economies of scale and direct government subsidy of offshore manufacturing of PV modules. Many, many offshore PV manufactures sold modules at below their cost to gain market share and consequently some US import duties were instituted to offer some protection from these predatory practices. Many photovoltaic module manufacturing companies that were operating viable businesses could no longer compete economically and were forced out of the PV module manufacturing business altogether. Many of the large scale PV makers hold tremendous debt on their books (a few -over a billion dollars) and are only still in business due to their government subsidized status.
- American PV module and equipment makers saw some limited relief via the Buy America ACT (ARRA), photovoltaic modules had to be made in the US – for photovoltaic systems to be installed on federal government, or state owned or affiliated facilities, including other publicly funded projects such as schools, hospitals and other public buildings.
- The number of PV module mounting system manufacturers also grew – over a magnitude of order in number from just a few years previous prior. American manufacturing jobs have been sent overseas, since 1981, and many US cold rolled metal manufacturers jumped at the chance to produce module mounting structures. In 2005, there were around a dozen recognized US mounting system manufacturers, where in 2012 this number jumped to over 75.
- The global PV module industry saw a silicon shortage that briefly raised PV prices; this quickly disappeared, as global polysilicon production ramped up.
- As the traditional expensive component of photovoltaic systems, PV module prices have dropped precipitously, the market then quickly looked at other areas to satisfy the insatiable hunger for further costs reductions. There after great pressure was placed on the balance of system manufacturers to reduce retail pricing and develop new innovative products with significant safety improvements.
- Component cost reduction attention was focused on the solar electric inverter manufacturing industry and the photovoltaic module array mounting system industry to reduce costs and innovate.
- The majority of all photovoltaic module array mounting structures have been redesigned to employ what are known as “top-down” module clamping methods that provide great installation labor savings and a reduced number of fastening hardware components.
- The industry growth rate forced regulatory imposed innovations to be adopted at almost a blinding rate to normal product development cycles. These included such product developments such as PV (DC) GFIC devices, AFCI devices, non-isolated inverters, above 600VDC rated PV system equipment, Rapid (Electrical) Shutdown of roof top PV sited arrays (for first responders) and the recent UL 2703 listing for PV module mounting structures and UL 4703 for tracking PV module mounting structures
- In addition, California authorities first adopted rooftop minimum setbacks for walkways and rooftop egress; which significantly reduced the amount of roof area for possible PV deployment – which other states and other jurisdictions quickly followed. Reducing the available deployable area for PV on a given roof, lessened the return on investment for PV customers and lengthened the period for return on investment.
Very few industries have ever experienced such dynamic growth and rate of change of market conditions in less than 10 years. Market forces have driven down PV system equipment costs in general – in hopes of gaining market share and aiming at energy cost(s) approaching grid parity on large utility scale systems.