The global PV industry one of the most rapidly evolving industries in the world, with estimated investments of around $90 billion dollars in 2012. As we have described before, it is changing the face of energy generation and transmission around the world.
Australia has been a willing participant in this energy revolution and already has more than 1 million solar systems on its rooftops, launching itself back into the list of the world’s top 10 solar markets.
However, hyper growth industries never get an easy ride; there’s a good reason it’s often referred to as “the solar coaster”. Despite all the growth and exploding revenues, profits have been abysmal, collapses alarmingly frequent and the supply and demand balance is hopelessly out of balance.
So how can solar buyers (consumers and retailers) pick a safe bet in amongst this ever changing landscape of PV manufacturers?
Australian solar industry Analyst SolarBusinessServices has set out to answer exactly this question in their latest report “Australian PV – Technology and Brands”. And just to change up the style a bit, we’ve thrown ourselves a couple of obvious questions and delivered some answers.
Q: What did this project take nine months?
A: This is the toughest report we have ever done. Thousands of companies, an ever changing market and a lot of complex information that had to be correlated and cross referenced. In such a fast moving market we had to keep re-writing the results!
Q: Aren’t there other reports like this one?
A: There are some, but we did two things differently to other reports. Firstly, we aimed to provide the widest possible data set we could and add a detailed description of the way they industry works for context. The first part is kind of like “PV industry 101” with data to back it up. Most importantly however, we deliberately focused the report on the Australian context – for both suppliers who want to target buyers and buyers who want to make informed global purchasing decisions.
Q: What’s the headline finding from your analysis?
A: I think there are two key findings. Firstly, this industry is in a constant state of flux and any claim made by any manufacturer should be considered a snap shot in time; things are just so volatile. There are some trends that can be meaningful, buyers need to be astute. Secondly, the general preferences are clear – across the globe large, quality brands and products are re-gaining ground on low cost players.
A: Why is that?
Q: In the last few years many inexperienced and low tech companies have entered the industry and sadly, too many have had technical, quality or service failures. Whether it’s a solar farm or a rooftop, solar consumers have similar expectations when it comes to durability and being looked after if things do go wrong. Some of the newer companies simply haven’t tuned into this and have focused purely on being cheapest but the moment someone cheaper comes along they are dumped. This has caused a lot of companies to collapse or exit and left a lot of buyers in the lurch.
Markets are maturing too; finance in increasingly important and they want low risk products. Commercial projects with complex contracts need assurance of energy delivery. And consumers talk; especially if they have had a negative experience. Referrals are more powerful than ever with modern social networks.
A: So who is the biggest and best then?
Q: To be the biggest and the best requires a mix of ingredients; profitability can be a measure likely survival, diversity in what a company does can insulate them from market dips and scale can theoretically provide cost advantage, for example. We came up with a core list of 15 ingredients for our measurement process.
We analysed as many factors as we could find and then ranked the major players but bear in mind we came up with a list of almost one thousand companies who claim to be in PV manufacturing; the real number is arguably more like a few hundred.
Having said that, there are clearly some companies who are ahead and like any manufacturing industry there are a core group who presently dominate. When considered in capacity terms for example, the top 20 companies can produce 59% of all listed capacity and the top 30 companies can produce almost 73%.
Q: Sure, but who’s the best in terms of the commonly used Tier ranking?
A: The Tier ranking scale was troublesome for us. Classic Tier rankings considered a fairly narrow range of ingredients and I had people telling me that they didn’t apply to their situation. For example, a globally ranked Tier 1 company who has no support or track record in a particular market shouldn’t necessarily be considered a prime choice in that market, right? Alternatively, a company who is investing heavily and co-operating to build a market (rather than just profiteering) and is only ranked Tier 2 globally might be a better choice in a specific market.
So, we created three different Tier ranking criteria that allows readers to choose a supplier based on what ingredients are most important to them and what their application is. For global bankability, you can use the Classic Global Tier. If a wider range of issues is more important (such as environmental performance, for example) we created a Global All-In Tier ranking. Most importantly for your readers, we also created an Australian All-In Tier, which specifically looks at issues such as support, track record, investments, transparency and tenure in Australia.
Of course, price competitiveness plays a crucial role too.
Q: OK, let me put it this way; I’m an Australian solar company trying to do the right thing for my customers – who would I choose?
A: First, I’d start with a company’s global scale, technological panache and the likelihood of financial survival as the basic ingredients. Then, I’d add a big dash of track record, commitment to the Australian market, a true understanding of quality assurance and how they will support you. To finish, I’d add a big spoonful of brand strength and of course have a little taste to see how much they can add to the flavour. Do they know what consumers want? Will they help me mix the ingredients, or am I alone, for example.
Although I am reluctant to pick any winners, I did pick a few trends based on our other research that I think will strengthen some company’s positions and weaken others in coming years.
Q: So who is the best?
A: You’ll have to buy the report.
Q: Not even a single graph?
A: OK, just one:
Nigel Morris is the Director of SolarBusinessServices