Nov 28 2013
With Asia emerging as the production hub for photovoltaic (PV) modules over the last few years due to the obvious cost advantage, PV material suppliers too have shifted their production base to the region.
The strong commitment to reduce carbon emissions, along with growing consumer awareness on environmental issues has fuelled the use of renewable energy, further widening market potential for PV materials. Support from governments in the form of subsidies, tax credits and feed-in tariff mechanisms has added to the demand for PV modules, and thereby PV materials in the region.
New analysis from Frost & Sullivan, Strategic Analysis of Asian Photovoltaic Materials Market, finds that the market earned revenues of US$1.94 billion in 2012 and estimates this to reach US$4.80 billion in 2018. The competitiveness of PV-based power due to continuous technological innovations, efficiency improvements leading to lower costs per watt, spurs the Asian PV materials market. China, Taiwan, and Japan together, account for over 70 per cent of the global solar PV cell or module production. The study covers the segments of frontsheets, encapsulants and backsheets. All PV modules contain all the three key PV materials.
"Global PV material manufacturers have established strong partnerships with PV module manufacturers, aiding market development. The close relationship between module manufacturers and material suppliers improves the material suppliers' insight into the market and ensures timely delivery as well as enhanced product offerings," said Balasubramaniam Ramani, Senior Consultant, Chemicals and Materials at Frost & Sullivan.
The PV materials market is expected to move towards the next stage of development, where affordability and achieving grid parity without depending on government subsidies will be vital. The challenge lies in improving technology while keeping costs down. In fact, the pressure to lower prices has already affected margins tremendously and squeezed out a number of smaller market participants, even forcing some to withdraw from the market. Price wars due to the economic downturn have compounded the challenge, and will affect both revenue and bottom line in the long run.
The tightening of incentive policies too has slowed down the solar industry and in turn, the PV materials market. Sudden changes in government support plans can harm the industry, as the uncertainty deters both investors and manufacturers. As a result, the PV materials market in Asia is expected to witness only moderate growth between 2012 and 2015.
"However, the period between 2015 and 2020 is likely to be a phase of rapid growth primarily due to the likely shift of backsheet production expected – the only segment where the move from European countries to Asia is yet to occur," concluded Ramani.
"Japan and China are likely to surpass European countries in terms of PV installations after 2015, lending strong momentum to the Asian PV materials market," he added.