Where have all the Solar Modules Gone?

Where have all the Solar Modules Gone?

by Sequoya Cross

Many of our customers have been asking about the uncertainty and instability of solar module supply this year. There are several factors at play.

To begin with, many solar manufacturers were hit with some of the lowest margins the industry had seen in 2016. Much of this to do with increased imports and a many year struggle with low cost modules. That does not mean that the blame needs to fall on Asian countries, who chose to subsidize their industry to see large gains. Many solar employers, manufacturers, utilities and businesses benefited from these lower costs. And the industry blossomed into a world leader, and living wage jobs were created.

However, many solar module manufacturers, realizing less than stellar earnings, chose to not increase capacity in 2016. For a growing industry, one where the installations are increasing each year, this choice can spell disaster and tighter supply chains.

Couple this with the fact that many overseas countries are willing to pay a premium for the same modules that the US is expecting to pay the same price or less than previous years, you start to see why the manufacturers might choose to either keep their inventory overseas, or else export from the US to those countries.

Many projects were already funded or secured using a lower price per watt than what is currently being offered, sometimes to the tune of .20/watt. With many large integrators snapping up whatever they can prior to the price increases and warehousing them for future projects, even sometimes 6 – 8 months down the line, shortages were bound to develop. Some of these companies choose to pay an increase of up to 20% for existing supply. Other distributors and suppliers were forced to take lower wattage modules to mitigate cost increases.

To put all the blame on a deflated price, Chinese dumping, whatever, is now irrelevant. One major issue is that American installers are unwilling to go back to their projects and customers and charge the price that solar demands, as a fluctuating commodity. The installers and distributors instead are absorbing the loss and at many times scraping the bottom of the barrel for whatever remains.

To add more fuel to the fire, we are on the eve of a major decision regarding trade tariffs on ALL imported modules. US manufacturers, Suniva (a now bankrupt Chinese backed company), and Solarworld are again mixing things up through what looks to be all out protectionism. Lobbying for a flat tariff that could potentially raise the price of solar by another .25/w.

Suffice it to say that we only have one major US manufacturer, and a multitude of lower capacity manufacturers that produce boutique modules at a higher price to fill the void. These companies are gearing for increased capacity soon, and many Canadian companies may not be affected by the tariff if it becomes a made in North America ruling as opposed to just the US. But the idea that modules made here in the states can bail us out of a shortage is well, short-sided.

Some of the remaining US companies, many of which do not support the tariff, may become major players should the tariff pass and you may start to see more in the US market are: Solaria- Fremont, CA (40mW capacity); SolarTech Universal- Riviera Beach, FL (60-cell Mono, 40 employees); Silfab Solar- Mississauga, Ontario (300mW, mono and bifacial); Seraphim Solar- Jackson, MS (360mW, mono); Stion- Hattiesburg, MS (150mW, Thin-Film), First Solar (Thin Film, supplies directly to large integrator and utility sector projects).

However, the fact that North American companies are growing, pricing will still increase dramatically across the board for the industry. A steep rise in panel prices “could be huge and disastrous for large-scale solar,” said Tom Werner, chief executive of San Jose-based SunPower Corp (SPWR.O), a top U.S. solar company that is majority owned by France’s Total (TOTF.PA). “Developers are alarmed and planning.”

Solar firms that cater to homeowners are nervous too. A spike in panel prices could slow residential installations and all the jobs that come with them.

Many manufacturers are already changing their business practices, placing clauses in their purchasing contracts that state that shipments to suppliers can be cancelled without warning should the tariff go forward. Many distributors, ourselves included, have already seen cancelled and suspended delivery dates as pricing continues to rise and other countries are willing to pay the increased costs. With manufacturers suspending imports completely to US companies, the hundreds of thousands of jobs the industry employs could be at risk as well.

Ed Fenster, chairman of San Francisco-based Sunrun (RUN.O), said moves by Trump to punish foreign manufacturers could harm American blue collar workers he has vowed to help. The solar industry employs more than five times as many workers as the coal mining industry that Trump has championed.

“A solar-panel tax imperils what our country needs most: well-paying jobs that can’t be exported or automated,” Fenster said. ~LOS ANGELES (Reuters)

END OF THE SHORTAGE IN SIGHT

Although we all are awaiting the tariff decision, we are hearing that supply should start to free up in November, when the natural downturn in installations and the bell curve of active sales starts to slow. This may cause many companies to sit on modules that are moving more slowly during this time. Ultimately seeing diminished returns in the process as liquidation of older stock to make way for higher density modules as manufacturers continue to refine their processes and increase cell efficiency.