PV supply chain prepares for Q1'13 demand surge in the UK

USA: Suppliers of solar photovoltaic (PV) modules and balance-of-systems components are preparing for a potential Q1’13 revenue windfall in the UK market. The windfall will be stimulated by anticipated downward revisions to Renewable Obligation Certificate (ROC) levels beginning in April 2013, according to the NPD Solarbuzz UK PV Market Entry Guide: New Revenue Opportunities report.

“Explosive PV growth in 2011 and 2012 was dominated by residential installations benefitted by attractive feed-in-tariffs,” according to Finlay Colville, Vice President of NPD Solarbuzz. “However, the focus at the start of 2013 will change rapidly to megawatt-scale ground-mount installations as installers seek to beat the end-of-March cutoff deadline.”

A significant pipeline of hundreds of megawatts of ground-mount applications accumulated in 2012, and successful projects delayed component purchases as global PV prices continued to fall. In what is expected to be a frantic rush for the lowest-priced off-the-shelf components, Asian module, inverter, and racking suppliers are now targeting further market share gains within the UK.

PV Supply Landscape Within the UK by Megawatt-Level (End of 2012)

Source: NPD Solarbuzz UK PV Market Entry Guide: New Revenue Opportunities report, December 2012.

Cumulative PV demand in the UK will exceed 1.6 GW by the end of 2012, with more than 94 percent of this demand installed during the past two years. This growth rate has elevated the UK to a top-10 global PV market in 2011 and 2012, and it has ensured that the UK is included in the leading PV suppliers’ global end-market strategies.

Moreover, the UK has a lower financial risk assigned to investments (compared to other legacy PV-rich countries within Europe), and many PV component suppliers are now planning long-term strategies based on sustained UK PV industry growth. The UK PV market is even more appealing to overseas suppliers because of the low level of domestic PV manufacturing in the UK.

However, it is supplying energy that underpins the UK’s role within the global PV industry. “Energy costs remain a highly emotive issue within the UK,” added Colville. “Consumers continue to prioritize investments to hedge against inevitable rising electricity prices. So long as PV system pricing continues to decline, there is a strong possibility that the Department of Energy and Climate Change’s Impact Assessment goal of 22 GW by 2020 can be reached.”

As the UK PV market transitions from an emerging high-growth opportunity to a more mature and stable end-market, PV module and balance-of-systems suppliers have to adjust supply strategies to align with the leading downstream installers and project developers.

“By the middle of 2012, there were more than 4,000 certified PV installers in the UK,” added Colville, “This made it very difficult for overseas PV suppliers to decide which companies to forge long-term supply relationships with. The growth of the ground-mount segment will assist in filtering down the list of downstream survivors, with many of these companies participating in the Q1’13 demand pull over the next few months.”