The solution to the stagnated PV market is tricky and messy. The moment we realize this, we realize that we are gambling with time! Understanding the dynamic supply-demand nature of the PV market is crucial to get rid of this gambling. Time is a critical element in this process.
In September 2019, when we were not surrounded by deadly Chinese Coronavirus (this is how I call it), I prepared for my first seminar as a credit requirement for my PhD programme. While reviewing the literature, I came across the following quote by Nobel Prize Winner Sir George Porter:
If sunbeams were weapons of war, we would have had solar energy centuries ago.
Within the next couple of months, I had submitted my seminar report, presented my work and received the highest possible grade in the course. The course had finished, but this quote was making me uncomfortable with every passing day.
The quote was like a starting point of a profound debate. It prompted many ‘what-if’ scenarios, and I could not separate myself from that philosophical thought!
1. What if we had mastered the utilization of solar energy thousands of years ago?
2. What if we had entirely became solar-reliant community centuries ago?
3. Why did we fail to acknowledge and work on the energy source which is undetectable part of our life?
4. Why did we forget to rip the benefits of solar energy for humanity till today?
5. What if our ancestors had already mastered solar energy utilization, became a fully solar-reliant community, ripped off its benefits but failed to preserve and pass on the knowledge to the next generation?
The quote had disturbed me mentally and forced me to rethink on my understanding of photovoltaics history. The rise and fall of fossil fuels (in terms of availability due to rising geopolitical tensions and technological innovations) have triggered the need to search for alternative energy sources.
It is only this time when solar energy started garnering some attention. Our attempt to benefit from solar energy had only been successful when solar heating and photovoltaics started showing positive results in terms of application.
The first serious application of PV technology was done in 1958 by US Navy in their earth-orbiting satellite Vanguard1. Since then, photovoltaics became leading choice for space applications and attracted more research fund to it.
Successful demonstration of photovoltaics in the space industry boosted our confidence in the sun. This resulted in the widespread use of photovoltaics technology for terrestrial applications by the end of the 20th century. Today, photovoltaics has emerged as a proven and promising technology.
The question that comes with the rise of photovoltaics is about its occurrence.
Is this happening for the first time that humanity is finding its energy source from nature?
If yes, then why did it take thousands of years to look at the sun which is with us since our existence?
If not, then when was the last time we used it extensively for our development? Where can we get this knowledge?
To be frank, I don’t have answers to these questions at the moment. What I can offer you at best is present situation of global PV market and opportunities for India in the same!
Talking about global PV market, my reading on the topic shows that few countries have dominated the photovoltaics industry in last five decades. The deployment data clearly indicates that PV installations have been geographically skewed and dominated by a few players.
According to IRENA, the global PV installations around the world stand at 578.5 GW as of 2019 (IRENA, 2020). Solar PV installations have been rising at a whopping rate of 28% for the last five years.
I have observed that most of the literature available on the internet is focused on a few countries wherein a large number of PV systems are installed.
China, Japan, Germany, United States of America, India, Spain, Italy, Vietnam, United Kingdom, Australia, and France are noteworthy countries.
You would be surprised to know that around 71% of global PV plants are situated in five countries (China, Japan, USA, Germany and India). When I say that PV installations are geographically skewed, I mean this…
Historical data shows that China has been aggressive at manufacturing as well as deployment front since year 2005. The rise in China’s PV installations after 2015 has contributed significantly to the overall global installation capacity. Around 361.2 GW of total capacity was installed in four years out which 161.5 GW comes from China.
China alone has installed 44% of global PV capacity from 2015 up to 2019.
China had led the trend of reducing PV panel costs since 2008 with the help of low labour cost, low energy prices and in-house development of polysilicon.
Those who are interested in the technical chart can see in the following figure that the module prices have sharply fallen after 2008.
It is noteworthy that Chinese module prices have reduced by 83.5% within four years, from 2008 to 2012. In these four years, Chinese manufacturers expanded their business outside the mainland.
However, Japanese module manufacturers couldn’t catch the price-reduction pace due to the vertically integrated closed market and institutional barriers (such as stringent safety requirements). During the same time frame, Germany had focused on price-reduction with the help of research and development. In contrast, China succeeded in the same by increasing the scale of manufacturing and mass deployment.
As opposed to Japan, Germany and China, development of PV in the United States is driven by state government policies. Federal support to PV policies has been inconsistent due to diverse opinions between the political rivals who ruled the country in past decades. States like California have been torchbearers of rooftop solar PV systems in the country.
The State of Market Stagnation and Way Ahead for India
China's rise as a worlds manufacturing hub in the second decade of the 21st century has challenged the traditional gameplay and changed the rules of the game. Prior to China's entry, the PV industry's conventional players were Germany, Japan and the United States of America.
The presence and dominance of Chinese manufacturers in the international market in the last fifteen years has resulted in cut-throat competition among big PV companies. The big corporates have to ensure that they innovate faster and maintain the leading position in the market.
The introduction of higher capacity modules (up to 450 Watt peaks), half-cell modules, bifacial modules, floating PV systems, micro-inverters, and anti-dust coating are examples of a few technological innovations the PV market is witnessing at the moment.
During my China tour in 2018, I observed that the Chinese government had thought through plausible future scenarios and offered diverse policy support to domestic companies to achieve its national targets.
China's five-year plans include long-term target-oriented strategies. The pro-industry policy support by the Chinese government and aggressive business expansion has limited the scope of conventional players in the PV industry over the years.
With the advent of Chinese Coronavirus, corporates are part of PV supply chain and are actively looking for non-Chinese alternatives to safeguard their businesses. Emerging countries like India, Vietnam are exploring ingenious ways to get rid of dependence on foreign countries.
In my opinion, India has an excellent opportunity to learn from China's story. 'Policy continuity' has been a significant benefit for India.
Policy continuity can be defined as the progression in terms of direction and course of actions in policy document with respect to the change in the political system over the course of time.
This can be understood by the USA's renewable policy. Over the past decades, the USA has experienced a drastic shift in its federal renewable policy due to the contrasting political opinion between ruling parties.
India has pro-solar policies since the beginning. The country should learn from China's five year plans to chalk out its long term goals related to photovoltaics.
Government of India’s popular reverse auction bidding mechanism has created and strengthened new market segment in the Indian PV industry.
Indian EPC (Engineering Procurement and Commissioning) companies have grown up and achieved commendable success in deployment sector due to the same. Today, many Indian EPC companies are expanding their businesses on the African continent.
However, their businesses heavily rely on imports due to the absence of adequate manufacturing capacity within the homeland. Hence, India needs to focus on manufacturing.
One might think that increasing manufacturing will solve the problem, but this is where things become tricky and messy. This is where gambling begins!
To build a self-reliant manufacturing industry, one must consider the dynamic supply-demand nature of the PV market.
PV technology is among top technologies who have steeper learning curve. The present nature of business practices in India (and similar countries for that matter) does not facilitate enough flexibility in responding to a rapid demand.
We, as a country, need to ensure that
raw materials are available in sufficient quantity and at affordable rates,
the duration and quality of transportation are well above minimum expectations,
substantial exposure is given to research, development and demonstration,
financial support is robust, and
skilled and trained human resource is available, etc.
This needs long-term strategic planning and all-round dedicated support during execution.
In other words, we need to think through the problem and envisage more comprehensive future scenarios and create long-term development targets to find the way ahead.
As far as the present government is considered, it has taken some serious steps in this direction with its flagship initiatives like ‘Make in India’ and ‘Aatmanirbhar Bharat’, but this is not enough! It lacks consistency among all stakeholders.
This gap needs to be fulfilled as early as possible. Time is a critical element in this process. We need to passionately take things forward to get rid of the gambling we are in at the present state!
References
IEA-PVPS. (1995-2019). Trends in Photovoltaic Applications. : International Energy Agency.
IRENA. (2020, July 31). Renewable Electricity Capacity and Generation Statistics, July 2020. Retrieved from IRENA RE Electricity Statistics Query Tool (Version 1.9): https://www.irena.org/Statistics
Ministry of Industry and Trade, Government of Vietnam. (2017). Decision No. 11/2017/QD-TTg of the Prime Minister dated 11 April 2017 on the Mechanism for Encouragement of the Development of Solar Power Projects in Vietnam. Prime Minister of the Socialist Republic of Vietnam.
REI. (Oct 2019). Solar Power Generation Costs in Japan. Tokyo: Renewable Energy Institute.
Statista. (2020, June). Quarterly solar photovoltaic module prices in the U.S. from Q1 2017 to Q1 2020. Retrieved from Statista.com: https://www.statista.com/statistics/216791/price-for-photovoltaic-cells-and-modules/
Statista1. (2020, April 14). Average electricity retail price Vietnam 2009-2019. Retrieved from Statista.com: https://www.statista.com/statistics/981190/vietnam-electricity-retail-price/
Pratik is a policy enthusiast, a blogger and a casual gamer! With a huge interest in solar PV policies, he is trying to understand social reality from the lenses of energy and development.
Pratik believes that India needs to bridge the gap between industry and academia with better educational setup. When not working, you can find him swimming, gaming, driving for someone and trying new local food outlets with friends. Currently, he is working as a research scholar at Centre for Policy Studies, Indian Institute of Technology, Bombay.
The opinion and views expressed are personal. You can write to him at pratikkjjoshi@gmail.com for further info. Check out his blog at www.yourspj.in