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Mercom Exclusive: Recently, Raj Prabhu, Managing Partner at
Mercom Capital Group, asked Al Velosa, Gartner Research Director, for
his 2010 insight on the PV market.
Uncertainty Will Shadow the PV Market in 2010
By Al Velosa
 As
you look at the PV market on a global basis, there is a general wave of
optimism as we have seen the general pick-up in demand. Germany
spearheaded this drive with a great recovery in the past quarter, and
will remain the world’s largest market in 2010. We’ve seen large
projects installed in the U.S. in Florida, with promising project
pipelines across the U.S. The Feed in Tariff in Ontario has
demonstrated strong demand up in Canada.
Yet as I peer into my crystal ball for 2010 for the PV market, I see two
core trends that will create significant uncertainty in the market and
make the CEO’s of PV firms walk a tightrope between business
development and supply chain management.
The first issue I see is continued issues with government incentives.
There has been extensive discussion in the media about potential changes
in German incentives in the middle of the year. Yet they are not the
only issue. In the U.S. market we are looking at a dual set of
incentive concerns. The more important tactical issue is the renewal of
the grant program in 2010. The second is the passage of a national
renewable portfolio standard by the U.S. government. It is hard for
anyone to predict political compromises. It is hard to see how these
issues will evolve in the U.S., especially as the Cap and Trade
legislation appears stalled in congress. Other countries have had delays
translating their legislation into implemented projects.
The second issue is the excess of capacity we see in the market.
Despite Q4 demand, the current installed PV manufacturing capacity is
significantly under-utilized. Especially if we look down into the Tier 2
and Tier 3 vendor plants. And this picture is further complicated by
expansion plans that have been either ongoing or announced in the past
quarter. Tier one vendors are in the process of adding well over a
gigawatt of capacity through 2010. All this translates to an enhancement
of the oversupply conditions we are in right now.
These two trends lead to a couple of key implications:
Price weakness: We expect to see price degradation of at least 20% over 2009 levels.
Bankability: This remains an issue for both new as well as
established firms. Established firms are rolling out new products (thin
film or modular solar systems) that will require further investment from
them both in terms of warranties and sales personnel.
Relationships: The key growth markets will require a more intensive
time investment in relationship building than some PV firms expect.
These markets have immature infrastructures, so PV vendors will need to
work with utilities and permitting authorities to develop processes for
PV projects.
Given these factors for the market, we expect that the top 2
priorities for PV vendor CEOs will be extracting flexibility and low
costs from their supply chain while ramping up their business
development efforts on a global basis. In fact, supply chain management
may end up being the most critical factor. Given how fast changes in
government policy may change our supply-demand balance, PV vendors will
be managing their supply chains very carefully in a just-in-time
fashion.
Therefore, look for continued investment in 2010 in operations
management at the leading PV vendors, with a focus on increasing
partnerships with leading EMS firms and on obtaining key talent.
Al Velosa is a Research Director at Gartner Inc. focused on the photovoltaic solar market
November 9, 2009
Mercom Capital Group Speaks About Global Market Trends for Utility Scale Solar at the TREIA Texas Renewables 2009 Conference
AUSTIN, Texas – Mercom Capital Group, LLC, an Austin-based public
relations, public affairs and market intelligence firm, is pleased to
announce that Raj Prabhu, Mercom’s managing partner, has been invited
to speak at the 2009 Texas Renewable Energy Industry Associate (TREIA)
conference held in Austin Texas at November 8 -10, 2009.
Raj will be speaking at the November 10 breakout session covering
utility-scale solar. His presentation will specifically cover global
market trends for utility-scale solar. The breakout session will begin
at 2:20pm CST. The conference is being held at the OMNI Austin Hotel
Southpark.
Copies of the presentation will be made available upon request by contacting Mercom Capital Group at info@mercomcapital.com.
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