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Inverter Servicers
To Fill Satcon Void

How can solar project owners and operators ensure that their inverters - and, thus, their installations - stay online when their inverter supplier has disappeared?

The question took on immediate urgency in March at project sites across the U.S. following the news that Satcon, which has long promoted itself as the No. 1 utility-scale and commercial-scale PV inverter manufacturer in North America, had begun Chapter 7 liquidation proceedings.

Satcon had initially promised to honor warranties on the thousands of its inverters deployed on the continent after its Chapter 11 bankruptcy last fall. But the liquidation step made any initial post-bankruptcy plans uncertain - potentially leaving plant owners out in the cold.

“When you get to that level of liquidation, customers are completely exposed in a way that leaves them very vulnerable to not having service and access to spare parts and components to make sure their units are up and running,” says Michael Levi.

Levi, who previously spent years as an executive at Satcon, is now working on tackling those service vulnerabilities in the company’s inverter fleet by performing consulting work for Trylon TSF. Trylon, an Elmira, Ontario-based service provider, was recently authorized by Satcon’s liquidation trustee to take on inverter field services for the fallen manufacturer.

Through its newly expanded SolarShield network, Trylon will treat the common inverter problems that Satcon’s customers have already seen crop up in their installations, including blown fuses, overheating and environmental erosion side effects.

“We have a huge population of installs coming out of warranty or going in their second, third or fourth year - that’s when issues happen,” Levi says.

 

Global opportunity

Across the Atlantic, another ex-Satcon executive has also begun addressing the operations and maintenance (O&M) service gap for the company’s inverters deployed in Europe.

Peter Deege, former general manager for Satcon in Europe, the Middle East and Africa, says his work in his current role as chief commercial officer at Photon Energy Group involves reaching out to Satcon’s existing customers and offering repair services.

The company is now home to least three other former Satcon employees and a Satcon-trained engineer hired by Deege. “The business model is very simple: Hire the best-trained service technicians and have access to spare parts, and you will be able to service a large customer base in need of service,” he says.

Spare-part supply chain access will likely be key for any third-party O&M offerings for Satcon inverters. Failed components cannot simply be replaced with their counterparts from competitors’ products, and the PV systems themselves are often designed around a particular inverter model, making unit-for-unit switches impractical, Levi points out.

Deege’s team also prioritizes educating Satcon’s customers about the risks of neglecting proper maintenance during this post-liquidation time. For example, even a maintenance lapse as seemingly minor as letting debris build up in the inverters’ air filters could lead to disastrous consequences.

“If [filters] are not cleaned, maintained and exchanged in time, it results in [exposure] to higher levels of stress,” Deege explains. “They have to work harder, and as a result, the insulated bipolar gate transistors overheat. If this happens, there is a big chance of the inverters catching fire.”

For Satcon’s customers, preventive maintenance programs will be crucial in order to minimize inverter failures, Levi agrees. However, he also foresees a broader opportunity in the inverter O&M market, even when the inevitable inverter manufacturer consolidation wave ends.

Before its financial woes, Satcon itself had already entered a partnership deal with Trylon and other third-party providers as part of a shift to a distributed post-sales inverter service model. The company’s goal was to “develop a service network that had the density and flexibility to get 24-hour response time,” Levi says.

This approach could become more popular in the inverter industry, opening up opportunities for third-party service providers. After all, even if an inverter provider is financially solvent, increasingly rapid inverter repairs may become more commonly expected by uptime-minded system owners.

“PV plant owners know that if an inverter fails, they not only have to battle with repair costs, but every minute their plants do not run at full capacity, they lose money,” Deege notes. - Jessica Lillian

 

U.S. Solar Market
Breaks Records

Based on early findings and their own experiences, many solar installation professionals in the U.S. already knew that 2012 was a year for the record books.

Now, the recently released Solar Market Insight (SMI) report from the Solar Energy Industries Association (SEIA) and GTM Research confirms that the market took several important leaps forward last year. In addition to completing 3,313 MW of new installations - a record - the industry also significantly matured and diversified, earning the trust of more financiers and greater respect by the public and utilities.

“We’re now attracting large investors,” noted Rhone Resch, president and CEO of SEIA, during a Google+ Hangout virtual event held in conjunction with the release of the SMI report. “Solar is viewed as ‘safe’ technology.”

These large investors helped the utility-scale segment of the market, in particular, soar in 2012. A total of 152 utility solar installations were connected to the grid, including eight of the 10 largest projects currently in operation, according to the report. Utility-scale installations represented more than half of new capacity added, totaling 1,782 MW.

Falling costs have helped propel that growth, especially in the utility-scale solar sector. “The $2/W barrier has always seemed like the sound barrier or the speed of light - an impossible threshold that we thought we could never get over,” said Arno Harris, CEO of Recurrent Energy and chairman of the board at SEIA, during the Google+ Hangout.

Industry-wide, the average cost of a completed PV system dropped 27% in 2012 alone, Resch said. On the residential side, the rising popularity of third-party ownership has shifted solar installations from “too expensive” to “affordable and more competitive than standard utility-purchased electricity” in many consumers’ minds and driven installation growth.

The report predicts that residential solar will “surge” this year and in the future as third-party ownership options become more widely available across the U.S. “Solar is increasingly affordable, and customers are starting to get smart,” Resch said.

Already, increasing geographic diversification has helped spread the U.S. solar market far beyond its California-­centric roots. “This is what is important for solar to take hold as a mainstream energy source in the U.S.,” Resch pointed out.

Although California ranked No. 1 once again in the report’s state-by-state rankings, becoming the first state to install more than 1 GW in a single year, Arizona, New Jersey, Nevada, North Carolina, Massachusetts and Hawaii each recorded more than 100 MW of installations.

“We will continue to expand outward into many markets - we should have a 50-state market,” said Shayle Kann, vice president of GTM Research, during the Google+ Hangout. “It’s just a question of how quickly we can get there.”

Supportive multi-year federal policy, especially the investment tax credit, played a major role in allowing the industry to expand in states across the U.S., Resch said. “It’s consistent with what we’ve seen in other industries when you provide a stable policy,” he noted.

The plummeting module prices that also helped the U.S. solar market grow 76% last year took their toll on some solar product manufacturers, and module oversupply persists, the panelists acknowledged. However, according to Resch, the overall solar supply chain remains healthy, with more companies and employees joining in every day.

The steady flow of new companies and new voices in the market will result in more competition, more innovation, new business models and, ultimately, more vibrant growth, Kann added. With low module prices, balance-of-system components and installation soft costs will experience particular opportunity for necessary cost reductions.

Overall, the three panelists concluded, the noteworthy numbers in the SMI report provide proof that solar has truly arrived in the U.S. and placed itself in a position to continue building on existing momentum.

“Fundamentally, the exciting thing at the heart of all of this is that the industry has answered three big questions,” Harris said.

Those three questions - frequently posed over the years by utilities, businesses and others considering involvement with solar - concerned whether solar was affordable, scalable and capable of attracting capital.

Now, with these impressive installation totals and cost-reduction numbers to back its claims, the industry can definitively answer yes to all three questions, Harris said.

- Jessica Lillian

 

Did Mistakes
Sink Suntech?

Suntech Power’s epic plunge from solar module dominance to bankruptcy comes as the result of misplaced investments, a misguided pricing strategy, anti-dumping action in the U.S. and a potential new willingness by the Chinese government and banking system to cast off detrimental manufacturers, according to information and analytics provider IHS.

China’s Suntech recently announced that its main operating subsidiary, Wuxi Suntech, had been pushed into bankruptcy by eight Chinese banks. This represents a major fall from grace for Suntech, which as recently as 2011 was the world’s largest supplier of photovoltaic solar modules.

“The seeds of Suntech’s fall were planted during its rise to market leadership,” says Mike Sheppard, senior PV analyst with IHS. “In 2009, at a time when the solar market was reeling from bloated inventories and cashflow concerns, Suntech was one of the few companies willing to brave the uncertain business conditions and invest aggressively in manufacturing capacity.

“This bold strategy resulted in Suntech’s becoming the world’s largest PV module supplier in 2011,” he continues. “However, in retrospect, the company failed to invest in all the correct areas, specifically in wafer manufacturing. By failing to vertically integrate in this fashion, Suntech was caught in a cost squeeze between falling system, module and cell pricing and steady wafer expenses - making the company uncompetitive.”

Suntech worked hard to earn its price premium status, according to the report. As the first Chinese company to do so in the PV market, it was considered at the same level as top-tier U.S., European and Japanese producers.

But turbulence began to occur for the company in 2012 with the U.S. anti-dumping trade case, led by SolarWorld, gaining traction against Chinese producers. Investors in the U.S., afraid of retroactive elements of the anti-dumping action, avoided Chinese modules in their installations.

This had the most negative impact on Suntech, which was the No. 1 module supplier in the U.S. market with 600 MW worth of shipments during the year, IHS says.

Compounding this issue were financial concerns over the global solar fund, which is still being investigated for alleged illegal activities. The net effect of these two events hurt the company, significantly eroding the price premium it had earned. By the time news of internal power struggles and the exit of Shi Zhengrong, Suntech president and CEO, had come to light, it was too late for a company so laden with debt.

“This potential insolvency is an indication that China’s central government may no longer be willing to support any manufacturer in any condition anymore,” said Stefan de Haan, principal PV analyst with IHS. “A little bloodletting may help soften the trade case in the EU.

“And with a major player folding, China can demonstrate it is not fully supporting these companies anymore,” de Haan adds. “This means that the consolidation in the PV industry will continue, since there are still many hundreds of suppliers and there is still a fundamental overcapacity in the market.”

In the short term, Suntech’s potential insolvency strengthens the position of other leading suppliers. However, over the long term, Chinese-­based banks may be reluctant to provide funding for other Chinese solar companies.

Even so, IHS does not expect an immediate shift in the supply and demand balance. Although consolidation among suppliers will continue, a turnaround in the PV industry is expected to occur this year in light of growing end markets, stabilizing prices and revenues, and positive single-digit margins for best-in-class manufacturers.

 

Survey Says Buyers
Happy With Solar

Seven out of 10 Massachusetts solar owners believe solar energy is a better investment than a major property renovation or buying a car, according to a recent survey by New England Clean Energy. When asked which of the three was the best investment, 70% said solar, 29% said a property renovation and 1% said buying a car.

The survey also found that seven years after its introduction, the 30% federal tax credit for solar electric systems is a strong motivator for installing solar, with 70% of respondents selecting it as one of their reasons for installing solar.

A full 95% of solar owners are happy they installed solar, with 54% saying they “couldn’t be happier” with their solar energy systems.

“Not many products or services boast a 95 percent approval rate, especially a relatively new product like solar,” notes Mark Durrenberger, president of New England Clean Energy. “I attribute this high favorability to the fact that solar electric systems are reliable and virtually maintenance-free.”

However, the survey revealed a potential concern about the state of the solar installation industry, as nearly one in five respondents replied they had heard of or seen shoddy or unethical work by a solar installer.

“This was bound to happen as installers flooded solar-friendly Massachusetts,” Durrenberger says. “Our challenge as an industry is to preserve the integrity and professionalism of the solar installation business by raising awareness and educating consumers about what to expect from a solar installer.”

When questioned on industry trends, 96% of respondents agreed the solar market should be subsidized by the government, with 61% saying the subsidy should be indefinite because fossil fuels are subsidized and 35% saying until the solar sector is truly established.

Although 70% of respondents said they were aware Massachusetts is one of the most solar-friendly states in the country, 94% said using a local company versus an out-of-state company is important, because buying local supports neighborhood businesses, helps the local economy and creates local jobs.

When asked about purchasing versus leasing a solar electric system, only 9% said they would be interested in a lease-type agreement with no money down if they were installing solar today, New England Clean Energy says. However, 29% were undecided, and 62% said they would not be interested.

More than half of respondents - 51% - felt that purchasing solar was the better arrangement for the consumer. New England Clean Energy notes that although it offers both leasing and purchase models for customers, all survey respondents had purchased their systems.

The survey also revealed the following statistics:

• 20% of respondents check their solar production online daily, 27% do so weekly and 23% do so monthly;
• 78% know how much energy their system has generated since it was installed (which, in some cases, was years ago); and
• Most people - 63% - used money from a savings or other bank account to make their solar investment, while 28% borrowed money via a bank loan or mortgage refinancing.

 

European Installers
Oppose Tariffs

The majority of solar installation companies in the European Union (EU) are opposed to penalties and protective tariffs on solar products, and should such measures be introduced, installers will be forced to change their product portfolios accordingly, says Germany-based market research firm EuPD Research. This change will also affect European products partly containing Chinese components.

Since March, companies have been required to register the import of products from Chinese photovoltaic manufacturers with EU authorities. This rule applies to Chinese crystalline photovoltaic modules, wafers and cells. Experts presume that in June, an EU commission will meet to discuss the possible introduction of protective tariffs, known as anti-dumping tariffs.

EuPD Research’s recent survey, which involved approximately 120 European installers, was designed to examine the impact of potential tariffs on “small-scale craftspersons.” Most respondents expressed opposition to tariffs.

“The most widely used arguments brought up by installers against protective tariffs are that these measures would endanger their business models and that a general price increase would be likely to occur,” says Dr. Thomas Olbrecht, head of sales at EuPD Research. “Many installers also fear that some European products could also be affected by the punitive measures due to their use of Chinese suppliers.”

If tariffs are enacted, companies with Chinese products in their portfolios stated that they would only purchase these from trade wholesalers in the future in order to reduce the risk of being affected by retroactive payments. Some of the installers with Chinese products in their portfolios have also considered changing their suppliers and would give preference to European manufacturers.

Additionally, according to the EuPD Research survey, installers who already carry only European products do not plan to change their purchasing habits but will nevertheless carry out thorough checks of the specifications and supplier countries of the products they offer.

The survey also found that most of the installers surveyed are not satisfied with the information policy of the Chinese manufacturers.

The installers expect concise and honest information and would prefer that manufacturers include them in the discussion of such matters and communicate more clearly what effects the punitive tariffs would have on the supply situation, prices and possible retroactive payments.

According to the survey, installers also expect the media to provide more objective information on the situation. However, they also expect consumer media publications to pander more to party politics and not to sufficiently fulfill their role as neutral relayers of information.

 

PV Demand Will
Boom In Asia

Solar photovoltaic demand from the emerging Asia Pacific and Central Asia (EAPCA) region is forecast to exceed 3 GW by 2017, based on findings in the new NPD Solarbuzz Emerging PV Markets: Asia Pacific and Central Asia report. Compared to 723 MW of PV demand in 2012, this represents a strong compound annual growth rate of 28%.

“Previously, most solar PV applications across the EAPCA region were based upon solar lighting applications or residential schemes,” says Steven Han, analyst at NPD Solarbuzz. “However, future PV demand will be based upon widespread adoption of large-scale, ground-mounted PV installations. By 2017, the ground-mount segment will account for 64 percent of all PV demand from the EAPCA region.”

Solar PV demand across the EAPCA region remains highly fragmented and is characterized by a diverse range of policies and end-market drivers, which is consistent with PV industry adoption in other emerging markets, NPD Solarbuzz says. However, solar PV is well understood by policymakers in the EAPCA region, with the Southeast Asia region widely recognized as a leading hub for upstream manufacturing.

Solar PV demand across the region will be dominated by Thailand, Malaysia, the Philippines, Indonesia and Taiwan. Between 2013 and 2017, these five countries will account for 50% of the cumulative PV demand forecast from the EAPCA region, the report predicts.

Thailand is forecast to be the region’s largest market, driven by rapid growth in demand for electricity and the requirement to decrease its financial burden from imported energy. Short-term PV demand will emerge by executing on project pipelines accumulated from the previous incentive scheme.

Indonesia has long-term plans for solar power to provide 0.3% of the national energy mix by 2025, equivalent to 1 GW of new solar demand. Indonesia is forecast to become the second largest solar PV market within the Southeast Asia region by 2017, supported by forthcoming feed-in-tariff incentives. Taiwan and South Korea have also prioritized solar PV within their renewable energy targets.

Over the next few years, a greater number of countries will contribute to overall PV demand from the EAPCA region, NPD Solarbuzz says. The Philippines accumulated more than 500 MW within its solar PV pipeline at the end of 2012, with strong investments coming from Japan and South Korea.

In addition, Bangladesh has developed a large off-grid PV market with plans to install an additional one million solar PV systems by 2016. Kazakhstan is targeting 77 MW of solar power generation over the next few years, and Pakistan has announced over 500 MW of solar deployment.

 

Rankings Reveal
Largest Solar EPCs

For the first time, U.S.-based First Solar became the world’s largest photovoltaic engineering, procurement and construction (EPC) contractor in 2012, with more than 500 MW of projects completed. This total represented an increase of 50% over 2011’s total, according to a new report from IMS Research, now part of IHS Inc.

The report also revealed that a major shift in global rankings occurred in 2012 due to the explosive growth witnessed in Asia and the Americas at the expense of Europe.

Just four European EPCs appeared in IHS’ top 10 rankings for 2012. Two other U.S.-based EPCs - SunEdison and SunPower - were also featured in the top 15, installing 390 MW and 190 MW, respectively.

“Because of the dramatic shift in demand away from Europe, non-European companies are now completing vast numbers of PV projects around the world,” notes Ash Sharma, senior director of solar research at IHS. “Last year, just four of the top 10 EPCs and system integrators were based in Europe due to the large project business of U.S., Chinese and Indian companies. Back in 2010, seven of the top 10 EPCs were European.”

First Solar and SunEdison were found to have benefited from the huge utility-scale PV pipeline being constructed both in the U.S. and many other countries over a number of years. These projects include the 550 MW Topaz solar farm and the 290 MW Agua Caliente solar project.

Asian EPCs also featured heavily again in the 2012 rankings, IHS says. Most notably, these firms included Chinese companies linked to state-owned utilities and industrial companies that benefited from massive domestic demand in ground-mount projects.

“Four of the 10 largest EPCs last year were Chinese companies,” says Sharma. “There were another eight that appeared in the top 30. These companies are likely to see continued gains as their domestic market continues to grow rapidly and the Chinese market remains largely impenetrable to foreign firms.”

Interestingly, an Indian company, Larsen & Toubro, appeared in the top 10 ranking for the first time. Larsen & Toubro is estimated to have completed nearly 200 MW of projects in 2012, nearly double the amount that it completed the year before. Like their Chinese counterparts, Indian EPCs remain in an excellent position to capitalize on the high growth of domestic ground-mount projects, according to the report.

Although European EPCs slipped down the rankings, the vast majority of PV EPC and system integrators are still located in Europe. In fact, 11 of the 30 largest EPCs last year were European, installing 2 GW of new capacity between them.

These same companies are also becoming increasingly active in new emerging markets around the world, including Latin America and Asia, the report adds.

“Despite all of the dramatic changes in the EPC landscape in 2012, one thing remains constant: The industry remains incredibly fragmented,” Sharma explains. “First Solar’s EPC business represented just 2 percent of the total market, and the top 30 EPCs only accounted for 24 percent of the global projects business - roughly the same as 2011.” R