Santa Clause may only be 54 sleeps away, but there is no let-up in the pace of activity and change for the local or global PV industry its seems.
By chance, I spoke to a punter yesterday who summed up their recent change of heart to go solar like this: “We could have, perhaps should have, put a system on a year or two ago, but we put if off. The latest bills are in and now, well, the cost of electricity just seems to make it worthwhile, despite the lack of support.”
My friend realises the proposition isn’t as good as it was and is perplexed, nervous even, about the perceived lack of government support, so he rang me for reassurance.
“And I see the damn things going up everywhere,” he said.
It is this attitude, the solar snowball effect that is slowly starting to emerge as an underlying trend in our industry. Right on cue, research just released by Yale and New York University proves the solar snowball phenomenon not only exists, but is statistically measurable, in the US at least.
The results were material too, even taking into account the potential effects of clustered marketing or environmental preferences in the postcodes studied, which were in California and installed between January 2001 and December 2011.
Turns out just 10 extra solar installations in a postcode increased the likelihood of other installations by 7.8 per cent. And with a 10 per cent increase in the number of solar installations in a postcode, there will be a 54 per cent increase in the number of those going solar.
Bryan Bollinger, the other co-author and assistant professor of marketing at New York University Stern School of Business said: “These results provide clear evidence of a statistically and economically significant effect.”
Visibility and word of mouth are pushing the solar snowball faster and faster.
More evidence? Sure, just look at Queensland.
Although there was a palpable gurgling sound as the market surged to historic levels chasing the tail of the 44 cent FIT, “something’s not right,” according to industry sources. Despite the end of the program and only a few short months on, applications for PV installations – at 8 cent kWh – have re-emerged already, with an average of 70 new applications a day rolling in.
However, and perhaps helping to drive the snowball, are continued tremors in the industry. The ratio between cost price and sell price are dangerously close creating a potential price illusion for unwary downstream players.
Silicon prices continue to plummet, pushing pain levels even further upstream with Bloomberg recently forecasting prices in the mid $18/kg range by 2013; down from $475 only four years ago. The world’s largest polysilicon producers are now recording big losses, halting expansion, even pausing production and guidance is still headed down on our precious solar stocks.
Everyone everywhere is looking for margin it seems; but it’s as rare as a stable policy environment.
Polysilicon is not just a China problem either; the solar juggernauts who command 60 per cent of world module production only have around 25 per cent of global polysilicon capacity but around 85 per cent comes from mighty big players in the Chinese PV economy such as GCL Poly and LDK. The top 5 global producers include Wacker Chemie from Germany, Hemlock from the US and REC from Norway, so oversupply remains very much a global issue.
But China’s PV manufacturing capacity continues to grow into an increasing burden; for themselves. Estimates suggest China exported $US35.8 billion of solar products in 2011, incredulously, almost as much as the entire value of its shoe industry at $US39 billion. I don’t know how many shoes that is, or what share they have, but I’m betting it’s a lot. And with $US18 billion in low interest government-backed loans, and hundreds of thousands of jobs at stake, change is not moving fast.
In a fascinating insight, the Economist noted earlier this year that land, regulations taxes and labour are all going up in China and I’m betting that the hi-tech PV industry is part solution and part problem.
Back at home for a minute, we have new data commissioned by the Clean Energy Council and produced by SKM MMA out yesterday. This excellent piece of work provides up to date data on the impact of renewables on our electricity industry; and just why the conventional electricity industry is a bit skittish about renewable energy and the RET in particular.
They can feel the ground rumbling under the weight of the solar snowball.
The report demonstrates (amongst other things) that wholesale prices will be lowered by the combination of the RET and the price on carbon, creating fuel for the fire of complex and time consuming regulatory reform.
The next phase of our industry’s growth sure will be interesting.