Surviving the Shakeout:  Winners and Losers in Crystalline Silicon PV

by Travis Bradford

An influx of new entrants, combined with dramatic capacity expansions from established manufacturers, has meant that crystalline silicon-based PV has become an increasingly crowded and commoditized space over the last two years. Add to that a recession-driven demand slump and an expected thin-film ramp over the coming years, and there is little doubt that competition in this segment will be extremely fierce.

Building off the insights and findings in GTM Research’s ground-breaking reports PV Technology, Production and Cost and Global PV Demand Analysis and Forecast, this report will take a closer look at crystalline silicon-based business models, detailing what it will take for a cell/module manufacturer to succeed over what is widely expected to be a challenging time for the industry. The report dives deeper into 50 prominent crystalline silicon-based manufacturers in the market and conducts a comparative analysis over a range of key metrics, extracting conclusions pertaining both to individual companies and business models. Along the way, it details a wide range of company-specific data that allows a crystalline silicon-based manufacturer to accurately assess its competitive position in relation to its peers.

Key Insights

  • In the wake of rapidly falling ASPs, a superior cost structure is critical for a successful manufacturing business model, especially for a firm that lacks downstream access. In-house polysilicon production capabilities still confer a material cost advantage, and can offset high conversion costs. At the same time, the fact that spot prices are down to around $100/kg today means that companies at large scale or that have production facilities in low-cost locations (China, Taiwan, other Asian countries) can make up for higher blended polysilicon prices through a lower non-silicon cost.
  • A large majority of producible cell supply in 2009 to 2010 comes in between $1.35 to $1.75/W, and most module supplies will be produced in the range of $1.80 to $2.20/W.
  • Next to a competitive cost structure, a strong balance sheet is the most important metric in determining a company’s fate over the course of the impending shakeout.
  • Based on the dynamics of polysilicon spot and contract pricing from 2006 to 2008, producers can be grouped into one of three categories: (i) well-capitalized and established firms that were able to secure long-term contracts with incumbent poly producers in 2006 to 2007, and will remain relatively unaffected by the spate of recent and upcoming perturbations in the spot market; (ii) firms that have a low contracted position coming into 2009, and will be able to take advantage of the relatively cheap polysilicon on offer in the spot market; (iii) companies that entered into long-term contracts past 2006 that signed with lower tier, higher marginal-cost players, and could find themselves in the unfortunate position of being locked into contract prices higher than current spot levels.
  • Given significant oversupply at the components level, downstream access has emerged as the most crucial aspect of a cell/module manufacturer’s vertical integration strategy. Downstream integration is especially important for firms that do not have a low-cost business model.
  • Business model strengths exhibit a marked bifurcation along regional lines: China and Taiwan-based companies have a definite edge when it comes to processing costs while American and European firms have superior brand recognition, downstream access and proximity to end-demand.

Featured in This Report:

  • Detailed, numerical assessment of 50 crystalline silicon-based cell and module manufacturers over a range of key metrics, including:
    • Degree and nature of vertical integration
    • Cost structure
    • Balance sheet strength
    • Polysilicon procurement arrangements
    • Technology differentiation
    • Manufacturing scale
    • Proximity to demand
    • Brand recognition
  • Company-specific feedstock, wafer, cell and module conversion cost estimates for 2009 to 2010, utilizing the most robust and data-driven methodologies in the industry
  • Quantitative financial liquidity and balance sheet analysis by company
  • Company-specific assessment of polysilicon procurement arrangements, providing detailed information on major contract signings from 2006 through 2009
  • Company-specific cell and module manufacturing capacity and production data for 2008 to 2010, leveraging the most comprehensive, accurate and up-to-date primary data in the industry
  • Current and future cell and module conversion efficiencies by company
  • Quantitative assessment of aggregate business models by company and analysis of overall positioning
  • Detailed profiles of top crystalline silicon-based cell/module manufacturing business models
Travis Bradford Consultant, President of the Prometheus Institute

Travis Bradford is one of the world’s leading experts on innovative energy technologies, markets, and economics.

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