Trends & analysis: Mixed signals for U.S. solar industry

PV installations are on the rise, but falling prices and overcapacity still plague manufacturers
Katy Devlin
August 14, 2012
COMMERCIAL, FABRICATION : TRENDS & ANALYSIS, TRENDS

There’s good news and bad news when it comes to the U.S. solar industry. The good news: solar panel installations are on the rise. The first quarter of 2012 saw 18,000 photovoltaic systems come online, marking an 85 percent increase over the same period in 2011, according to the Q1 2012 U.S. Solar Market Insight Report from the Solar Energy Industries Association and GTM Research.

But while the number of installations has gone up, prices have gone down, falling more than 50 percent in 2011. This low pricing, coupled with excess supply, has negatively impacted domestic solar panel manufacturers.  And glass manufacturers down the supply chain are feeling the effects.

The installation surge

“The [solar] industry is growing by leaps and bounds,” says Steve Coonen, BIPV consultant and principal, PV Glassworks, Grass Valley, Calif. “We’re seeing dramatic year-over-year growth, and we have certainly found enough roots in the industry that we’re not going away.”

Fig. 1 U.S. PV installations, 2010-q1 2012

Source: Q1 2012 U.S. Solar Market Insight Report

The first quarter of 2012 represented the second highest quarter of solar installations in the United States ever, with the fourth quarter of 2011 taking the top spot.  (See Fig. 1) Nonresidential installations (commercial, government and non-profit) in first quarter 2012 grew 77 percent year-over-year. Much of this growth came from New Jersey, followed by California. Other states poised for nonresidential installation growth throughout the remaining quarters of 2012 include Hawaii, Massachusetts and New York, according to the SEIA report.

Residential installations in first quarter 2012 were up 31 percent year-over-year.

SEIA predicts the U.S. market share of global solar installations will reach nearly 11 percent in 2012, up from 7 percent in 2011 and 5 percent in 2010. “This will make the U.S. the fourth largest global PV market, and one of the few major markets (along with China, India and Japan) that can expect continued growth in the foreseeable future,” SEIA officials said in the report.

The manufacturing challenges

National Weighted Average System Prices, 2010-q1 2012

Source: Q1 2012 U.S. Solar Market Insight Report

Although U.S. solar installations are on the rise, excess manufacturing capacity, especially from China, has led to the significant drop in module prices, according to the Congressional Research Service.

“Lower prices may be good for PV consumers, but they are squeezing manufacturers, especially in the United States and Europe,” reports Michaela Platzer, specialist in Industrial Organization and Business, in her June 13 report, “U.S. Solar Photovoltaic Manufacturing: Industry Trends, Global Competition, Federal Support.”

At least six solar panel manufacturers closed U.S. production facilities in 2011 and 2012 so far, she reports.

Further downstream, Cardinal Solar Technologies, a division of Cardinal Glass Industries located in Mazomanie, Wis., laid off 57 employees in February, after its primary customer―a solar panel manufacturer―“saw its orders suddenly shrivel,” according to a Wisconsin State Journal article.

Bob Bond, president of Cardinal ST, told the newspaper that competition from manufacturers in China was “immense.”

"Prices have been falling for solar photovoltaic modules very, very rapidly in the last seven to eight months, with a huge influx of supply," he said.

Similarly, Cardinal Tempered Glass laid off 33 employees in April at its plant and off-site warehouse in Chehalis, Wash., where it produces tempered glass for solar panels, according to local newspaper, The Chronicle.

Japan’s Asahi Glass Co. shut down a K1 furnace at its AGC Glass Company North America facility in Kingsport, Tenn., earlier this year. The plant manufactures glass for the solar industry and was negatively impacted by the influx of imports from China, AGC officials told local newspaper timesnews.net.

Globally, AGC’s “shipments of glass for solar power systems decreased [during the first six months of 2012] from the same period of the previous fiscal year due to such factors as slowing market growth and an intensified competitive environment,” according to the company’s consolidated financial results for the six months ended June 30, 2012.

The NSG Group, also headquartered in Japan, announced in July that it would idle one of two lines at its Pilkington North America float/solar facility in Laurinburg, N.C.

The company reported “solar markets continue to be weak,” in its FY2013 Quarter 1 Results, and that it was “adjusting float/coating capacity to reduced solar glass demand” as part of its restructuring efforts.

Government action

In 2011, imports of solar cells from China were valued at an estimated $3.1 billion, according to the U.S. Department of Commerce. On May 17, 2012, the DOC determined that Chinese manufacturers were dumping solar panels into the U.S. market at less than fair value, and imposed a preliminary anti-dumping duty of 31 percent on imports of Chinese crystalline silicon photovoltaic cells, whether or not assembled into modules.

The DOC is currently scheduled to make its final determination in early October 2012. If affirmative, the International Trade Commission then will have to determine that U.S. producers of solar panels were hurt by Chinese dumping practices in order for the duty to take effect. At press time, the ITC trade panel was expected to announce its ruling in November 2012.

Katy Devlin is senior editor for Glass Magazine. E-mail Katy at kdevlin@glass.org.

  • BIPV presents growth opportunity

    Building Integrated Photovoltaics, while still a small segment of the solar industry, represents a steady growth opportunity. “Relative to the volume of the entire solar market, BIPV is a niche market, and has been for quite some time,” says Steve Coonen, BIPV consultant and principal, PV Glassworks, Grass Valley, Calif. “However, the opportunity is there, particularly, for glass companies that want to add these products to their portfolios.”

    Officials from Guardian Industries Corp. say they are already seeing increased interest in BIPV product. The company announced a collaboration with Pythagoras Solar in March 2012. The two companies will work together to manufacture and market SunGuard Photovoltaic Glass Units for commercial buildings.

    “We are finding that architects are increasingly interested in this product, and we are actively promoting SunGuard PVGU through our sales channels,” says Chris Dolan, director, commercial glass marketing, Guardian Industries Corp.