When solar hits parity broadly, the industry will expand by an order of magnitude. It’s not clear yet whether module makers will then reap significant profits from this growth. As in all markets, who does and who doesn’t make money changes over time.
Asia’s manufacturers typically go for market share first at the expense of initial profits. They hope to push out weaker competitors, reaching for the sometimes elusive promise of future profits.
Reflecting back again on electronics, China played this strategy in VCD and DVD players, TVs and PC motherboards. Hardly anyone made much profit, but it was good for the end users. Winners survived off supermarket-thin margins, relying on big volumes to get enough absolute profit dollars.
I think the jury is still out on whether solar module makers ever will be consistently profitable. However, China’s government takes a bigger view of the situation: They know solar energy can help clean up China’s environment by reducing the need for coal power plants. They believe savings from less pollution and fewer sick citizens are worth supporting potentially money-losing panel makers.
At least one major technical issue will impact the long term prospects for profits in solar panels. Engineers still don’t know just how long the panels will last or how their performance will degrade over time. The industry is still gathering data on how panels perform in real life over a 25 year lifetime.
For example, I recently read that SunPower’s panels which typically have some of the best efficiency ratings in the industry may have actual performance down as much as 20 percent from their theoretical ratings. One issue emerging for some of the newer technologies is called Potential Induced Degradation (PID). A panel with just 13 percent efficiency but without PID degradation may generate 20 percent more power over the panel’s lifetime versus one with a 19 percent efficiency rating.
Heat also affects panel output in ways that differ significantly with different panel designs. Dusk and dawn lower-light angled performance is becoming another closely watched characteristic. New software helps take into account many of the real-life factors that affect power output, but this is still an emerging science.
The rule of thumb used to be that a panel’s power output degraded about one percent per year. However, initial reports from Europe for some of the older panels installed in Sweden and elsewhere more than 30 years ago has found almost no degradation.
Perhaps the one-percent rule is too conservative for colder climates. Meanwhile thin film panels installed in hot climates such as Australia are degrading at much quicker rates than expected.
In addition, there is some evidence suggesting the simplest panels using the oldest technology may last longest. The newer high-efficiency panels may die earlier.
Meanwhile some people are questioning the assumption that panels need to be built to last 25 years. Many buildings are pulled down or have their roofs refinished on shorter cycles.
Also, an increasingly share of photovoltaic buyers are retirees looking to reduce electricity bills. Due to all these factors, demand is emerging for lower-cost, lower quality panels that last say only 10-15 years.
What happens if I install solar panels on my roof top today and after a couple years a more advanced technology comes in with panels with panels having much higher efficiency? Not sure if it is practical or not, but I think it would be better if the companies provides some kind of scheme to upgrade the panels at subsidized price if something better comes up.
A nice briefing on the solar panels present cost,energy efficiency,cost of solar power,life time reports of various panels installed at hot and chill places, and finally on the micro inverter approach.