There are two great things that come from taking a long break each year.
First, you get to connect back with life a bit; family, friends and just doing stuff you want to do. Secondly, it gives you a chance to extricate yourself from the grind of getting work done to philosophising about what you are doing and how to do it better.
For me at least, this is when the issues around solar and energy start to crystallise and arrange themselves better. Stimulated by a number of conversations and new data, I can now see through my PV coloured glasses that a revolution is underway.
I think this year is going to be incredibly fascinating for solar and energy and here’s why.
Forecasts and penetration
Each year I start out with a little geek-fest with my old friend Warwick Johnston from Sunwiz. This year will be the third consecutive year that we have sat down and analysed where we think the local solar market will go; and based on last year’s results, we are producing ever more accurate forecasts.
The most exciting part of the exercise this year was when we took something new into account which had previously not had such a strong influence; the effect of changing household penetration rates and the increasing interrelationship between them and technological evolution.
Penetration rates and their impacts can be assessed in many ways (e.g. available rooftops, grid penetration levels, general consumer penetration etc.) and whether the generic guides to flattening demand apply in the Australian PV market remains to be seen. However, the following graph describes the conventional wisdom about how markets react to technology uptake. Clearly, we are well and truly in the early majority phase of penetration.
With this in mind we added a whole new dimension to our forecasts; both positive and negative and some absolutely fascinating likely trends emerged. Just a few examples include things like:
-- Some states are likely to hit very high uptake penetration rates very soon. This will soften demand in some places and is likely to swing attention to others.
-- Potential flow-on effects from this include changes in the value of solar companies depending on positioning, changes to the likely conversion rates on marketing and sales and the need for enhanced innovation to get sales in new niches, in certain markets.
-- We also saw an emerging likelihood of some state-based schemes coming under changing pressure levels which will undoubtedly influence political reaction and policy.
Whilst we looked very hard at the likely trends in global PV in our forecast, the international PV manufacturing sector was something we paid particular attention to. As a large market (an estimated 1GW in 2012 alone), we are intrinsically connected to what happens in other key markets and the entire supply and demand chain.
China’s incredible importance in the supply chain and the implications of a 35GW global market demand in 2013 with an estimated 60GW of global capacity should not be considered lightly. Recent reports of many PV factories running at 50 per cent capacity utilisation does not bode well for many companies survival, and yet, the sectors importance purely in employment terms is so important, decisions about economic viability are viewed in an entirely different context by the mighty Dragon.
A shake-up is inevitable, but share prices and profit forecasts are improving from some of the world’s PV companies so just where the impacts are going to be felt remains unclear. What is clear is that choosing suppliers who are more likely to survive than not, is increasingly crucial.
But of course, the PV and inverter manufacturing sectors are awash with claims of superiority, strength and experience so how do you pick the right partners?
Storage and energy management
The other fascinating revelation we had was that between now and the end of our forecast period (2017), a significant increase in the uptake of storage and energy management devices has become inevitable.
Talking with a number of companies and reading the latest reports from around the world in recent weeks has revealed how rapidly this technology is evolving and we expect this part of the revolution will become increasingly obvious this year. We also found some fascinating niches where uptake is likely to accelerate sooner and some places where it will take longer. Once again, working through our various scenarios, the rate and timing of growth varies but what is absolutely clear is that it has started.
The storage medium is of course critical and although the favoured LiPo4 still has a little way to go until it is truly cost effective and proven, some really big things are happening in both the cost and innovative deployment techniques. If it’s not 2013, it will be very shortly afterwards when new types of storage are economic and the box they are housed in just may look surprisingly like a car or a motorcycle, adding a whole new dimension of versatility and economic rationale.
Intrinsically connected and equally important however, is the energy management system that allows this to seamlessly and practically work together. A number of companies are working on brilliant products that will hit the market in 2013, building on a small existing range; watch out for competition breeding innovation.
Revolutionary energy management and control is virtually at our fingertips and it is clear to me that in 2013 we will see a convergence of products and features like never before.
This is part one of a two-part feature. The second part will be published tomorrow morning.