Decline in module prices PV installations will become profit margins

The sharp drop in solar panel prices has helped PV installers attract new capital, a trend that may lead to consolidation of the PV installation market and lower installation costs of rooftop PV systems.

In 2011, the oversupply of photovoltaic panel makers such as Suntech, SunPower and Yingli Green Energy led to a 50% drop in the price of photovoltaic panels, and at the same time caused the stock price of these companies to suffer a severe setback.

However, with the decline in the price of photovoltaic panels, the cost of the installers purchasing photovoltaic panels has also dropped. SolarCity, a market leader in residential and commercial PV installations, is planning to apply for IPO this year, with an estimated IPO of US$1.5 billion.

After the successful IPO, SolarCity and RealGoods will become the only two listed PV installations. The success of them and their competitors SunRun and Sungevity will drive the exponential growth of the PV installation market, said Neil Auerbach, founder of Hudson CleanEnergy, a private equity firm.

Neil Auerbach stated that SolarCity is not the only installer to benefit from the drop in the price of photovoltaic panels. Photovoltaic installation will become an attractive area.

GTMResearch report shows that in 2011, the total solar installation capacity in the United States nearly doubled from 2010 to 1,500 to 2,000 MW. About 16% of them are residential roof photovoltaic installations and 40% are photovoltaic installations at commercial sites.

Most of the recent growth in solar installations has come from large-scale solar power plant projects that have been launched to meet California's wholesale power market. However, as the demand for large-scale California projects has gradually become saturated by 2015, investors have begun to favor the return on investment of small-scale installation projects. rate.

The Bank of America Merrill Lynch provided nearly one-third of the SolarStrong military residential project for SolarCity’s $1 billion, and the developer BorregoSolar’s ​​photovoltaic projects in California and Massachusetts recently received 4,700 from Bank of America and China and the United States. Million dollar funding support.

Companies such as Google have also invested in establishing funds to provide new financing tools for the PV market. These financing tools include leasing programs for residential property owners and businesses. This leasing system helps solar installers use outside financing to reduce the cost of the owner's upfront solar installations to very low or even zero, while reducing electricity costs.

Utilities PG&E and U.S. U.S. Bank provided US$400 million to support SunRun's solar PV leasing program.

However, the photovoltaic installation market is still relatively decentralized, with hundreds of small installers in California. Many industry experts believe that this market may be integrated, and that companies with stronger financial strength will acquire other small competitors.

Borrego’s chief financial officer, Bill Bush, said: “There is a certain regionality in the PV installation market. There are not many developers in the country, but this situation may change over time.”

GTMResearch pointed out that SolarCity is the leader in residential solar installation market, with a 14% market share, followed by RealGoods Solar, which accounts for 6%.

In 2011 RealReals acquired alteris and expanded its business from Colorado to the rapidly growing East Coast market.

Some of the larger PV companies have recently started offering PV rental solutions, including SunEdison and SunPower, under the umbrella of MEMCElectronicMaterial, but they are also focusing on the development of large-scale PV projects.

In the past two years, large-scale and utility-grade PV projects have become market-leading due to more cost-effectiveness, while the cost of small projects for individual houses or businesses is almost twice that of large-scale projects, usually between US$ 6 and 7 per watt. .

Industry experts said that although solar panel prices have declined significantly last year, the cost of residential and small-scale commercial solar installations has barely changed, and is even around 50% higher than the comparable solar installation costs in the German market.

Deep Chakraborty, chief executive officer of CentroSolarAmerica, a subsidiary of CentrosolarGroup, Germany, said: “The changes that have occurred in the photovoltaic industry in the past two years have not really benefited the end consumers. The owners are still waiting.” He said that customers enjoy the residential or small Commercial solar installation costs should be as low as $1 per watt.

Since most of the installers are very small companies, the equipment they purchase includes photovoltaic panels and wires, inverters, mounting brackets, and hardware, which increases costs. Centrosolar will focus on this part of the cost reduction, which is crucial to more effectively reduce the price of solar energy systems.

Creating a network of installers that can cover tens of thousands of households requires high costs. Some installers, such as Borrego, prefer to focus on the business sector, including corporate and government construction projects. These projects are much larger than the size of residential installations. .

Susqehanna solar energy analyst Mehdi Hosseini believes that if we want to expand the scale of residential solar installation market, we must further reduce the installation costs, but also need to reduce some participants, such as external financing. If you combine commercial and residential rooftop projects, you are more likely to grow your business.