Preliminary estimates from GTM Research put global PV module sales for 2013 at about $30.5 billion.
To put things in perspective, that is slightly less than mobile semiconductor sales in 2012 ($31 billion) and about 7 percent of electronics contract revenues in 2013 ($415 billion). It’s a pretty impressive number, considering the breadth of the electronics industry, the burgeoning popularity of smartphones and the fact that solar is just beginning to gain mainstream acceptance.
It’s all the more impressive when you take into account the fact that PV module prices are less than half of what they were three years ago.
At their zenith in 2011, module revenues were as high as $47.5 billion, as falling prices in that year were offset by demand growth driven by Europe’s final feed-in-tariff hurrah. This was followed by a market contraction of $20 billion in 2012, with a relatively flat market unable to arrest the seemingly perpetual crash in module prices.
While 2013 saw a return to sales growth, it does seem that the market has experienced a reset, and that 2010-2011 represented a high-water mark that will take a lot to surpass in the near future. As shown in the chart below, GTM Research’s base-case module revenue forecast for 2014 is $35.7 billion, with an additional upside of $10 billion. This still leaves us somewhat short of the 2011 peak.
With the benefit of hindsight, it is perhaps wiser to use the growth curve of the recent past as a new normal for the module sales market rather than build expectations off of the heydays of exponential growth and outsized supplier margins.
Source: GTM Research
Unsurprisingly, geographical trends in module sales closely follow installation patterns. China and Japan, which were the two largest end markets for solar installations in 2013, were also the two largest module sales markets, combining for $15 billion in revenue. However, while China installed almost twice as many megawatts as Japan, actual revenue from sales to China was only a third higher.
The disparity between shipped megawatts and dollars is due to the fact that module pricing in Japan in 2013 was 43 percent higher than China on average due to higher incentive levels, a preference for higher-efficiency modules, and the dominance of higher-priced domestic brands in Japan.
As reported in GTM Research’s recently published report on global PV pricing, Japan is currently the highest-priced PV module market in the world, with Japanese brands selling for over a dollar per watt even today. Conversely, significant volumes of modules were sold into China for less than $0.60/W in 2013.
Source: GTM Research
Looking to 2014, it is likely that China and Japan will again top the installation charts. However, pricing trends for these two markets are currently expected to run in opposite directions. While Japan could witness some compression as lower-cost foreign suppliers increase their market share and feed-in tariffs potentially step down in April, a new feed-in tariff in China and a tight silicon supply environment for domestic modules is likely to bolster pricing there.
Similar risk of price increases also exists for module prices in the U.S. in 2014. With upstream price increases (silicon, wafers, Taiwanese cells) already in motion, a tight supply environment expected through the year, and the possible imposition of additional tariffs on imports of Chinese or Taiwanese components, GTM’s base case sees delivered pricing for Chinese modules increasing to at least the $0.75/W level in 2014. While more tariffs would ultimately increase the size of the U.S. module market in dollar terms, it is doubtful, given the challenges that more tariffs would create for both suppliers and developers, that this news would be received with much pleasure by most sections of the U.S. solar industry. Even when it comes to revenue, more isn’t always better.
Shyam Mehta is Lead Upstream Analyst at GTM Research and the author of the recently published report, Global PV Pricing Outlook: Value Chain Trends, Global Drivers and Regional Dynamics. For more information on GTM Research, click here.