14 sam wilkinson - ims research
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Projections For Costs andPrices In the PV IndustryPrices In the PV IndustrySam Wilkinson – PV Research Analyst – IMS Research
The Solar Future: Belgium
Wednesday 23rd March 2011
Sam Wilkinson� PV Market Analyst, IMS Research
What Does IMS Research Do?� Market research, business intelligence,
consultancy and conferences� Provide market data, forecasts, competitive
benchmarking
Global outlooklocal knowledge
Enablingsound
A Quick Introduction
Inquiring minds
Independentunbiased
� 7 analysts focused on PV� Offices in UK, USA, China, Korea & Japan� Researching PV market for 4 years+� Clients include leading PV suppliers
More Information?� www.PVMarketResearch.com� www.IMSResearch.com
sounddecisionsunbiasedresearch
An Industry Which Currently Relies On Incentives
An Industry Shaped By Incentives (and Politics)
The PV Industry
An Industry Whose Future Depends on Reducing Costs
Global PV Demand – Current Outlook
20
25
30
Asia
Largest end-markets in 2010:
Germany Italy Czech Republic
0
5
10
15
20
2006 2007 2008 2009 2010 2011 2012 2013
Inst
all
ati
on
s (G
W)
Americas
EMEA
PV Module Supply – Current Outlook
40
50
60
Capacity -
Annualised
� Capacity Increasing very quickly in 2010
� Will continue increasing in 2011 and 2012 - faster than demand
0
10
20
30
40
2009 2010 2011 2012 2013 2014
GW
Production
Installations
PV Module Shipments – Current Outlook
20
25
30
35
40
Sh
ipm
en
ts (
GW
) Total
0
5
10
15
20
2009 2010 2011 2012 2013 2014
Sh
ipm
en
ts (
GW
)
PV Module Shipments – Current Outlook
20
25
30
35
40
Sh
ipm
en
ts (
GW
)
Thin Film
c-Si
0
5
10
15
20
2009 2010 2011 2012 2013 2014
Sh
ipm
en
ts (
GW
)
c-Si
PV Module Prices – Short Term
2,00
2,50
Pri
ce p
er
Wa
tt (
$/W
)
c-Si
� Many factors affecting short term trends in PV module prices
� Prices are generally decreasing over time
0,00
0,50
1,00
1,50
Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11
Pri
ce p
er
Wa
tt (
$/W
)
What Affects PV Module Costs?
PV Module costs are a complicated mixture of costs and prices, including:
� Polysilicon Costs and Prices
� Ingot and Wafer Costs and Prices
� Cell Costs and Prices� Cell Costs and Prices
� Module Costs and Prices
� Transport Costs
� Manufacturing Costs
� Taxes
Current Cost Structure Of A PV Module
1,20
1,40
1,60
1,80
2,00
Pri
ce p
er
Wa
tt (
$/W
)
Module
� Module and Wafer margins are currently inflated
� Many integrated cell and module manufacturers. Therefore, making the cell margin look even less
0,00
0,20
0,40
0,60
0,80
1,00
Costs Prices
Pri
ce p
er
Wa
tt (
$/W
)
Cell
Wafer
Polysilicon
Polysilicon Prices
80
100
120
Spot Price
Contract Price
� A small proportion of polysilicon is sold on the spot market
� Spot prices are volatile, particularly in times of high demand
0
20
40
60
80
Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11
Pri
ce p
er
KG
($
/kg
)
Contract Price
What Will Suppliers Do To Reduce Costs?
� Careful negotiation of supply contracts
� Increasing vertical integration
� By development, or acquisition, or partnerships?
� Research and development Increasing cell efficiencies� Research and development Increasing cell efficiencies
Reducing material usage and wastage
� Improving manufacturing efficiencies
� Outsource production or move abroad
� Higher volume and economies of scale
c-Si v CdTe Costs
1,20
1,40
1,60
c-Si
CdTe
� Cadmium Telluride modules represent the majority of thin film market
� Lower material costs, high volume, automated production with less ‘product steps’
0,00
0,20
0,40
0,60
0,80
1,00
Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11
Co
st p
er
Wa
tt (
$/W
) CdTe
PV Module Prices – Long Term Outlook
1,50
2,00
2,50
Pri
ce p
er
Wa
tt (
$/W
)
Module
Cell
Wafer
Polysilicon
0,00
0,50
1,00
2009 2010 2011 2012 2013 2014
Pri
ce p
er
Wa
tt (
$/W
)
Polysilicon
Thin Film
Average Inverter Prices
0,10
0,15
0,20
0,25
0,30
0,35
0,40
0,45
Pri
ce p
er
Wa
tt (
$/W
)
0,00
0,05
2008 2009 2010 2011 2012 2013 2014
Pri
ce p
er
Wa
tt (
$/W
)
What affects average PV inverter prices?
� Changes in product mix
� Trends towards certain regions or system types
Inverter Production Costs
Inverter production is very different to module production.
How can inverter suppliers reduce costs?
� A shift towards larger inverters?� Microinverters and power optimizers?� Move production to low-cost labour regions?
Other System Costs?
$ Modules$ Inverters$ Cables$ Connectors$ Frames$ Trackers$ Transformers$ Transformers$ Permit or application fees$ Grid connection costs$ Installation costs$ Service contracts$ Warranties and uptime guarantees
$ System Cost
System Prices
4,00
5,00
Other
Inverters
Modules
� Average system prices to decline ~40 % by 2014.
� Decreases in module price are the largest contributor to system prices reducing
0,00
1,00
2,00
3,00
2009 2010 2011 2012 2013 2014
Pri
ce p
er
Wa
tt (
$/W
) Modules
� Incentive levels are declining and price reductions are essential throughout the industry
� System prices can fall sufficiently to maintain market growth
� System prices can reduce by 40% by 2014
Conclusions
� All areas of the industry have potential to reduce costs
� Module prices have particularly good potential for cost reduction
� Any questions??
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