An
increasing number of the top 20 solar photovoltaic (PV) module suppliers are
shifting their strategic focus within the industry, by increasing shipments for
dedicated in-house projects.
Top 20 module suppliers grow downstream pipelines, increasing
shipments for in-house projects
An increasing number
of the top 20 solar photovoltaic (PV) module suppliers are shifting their
strategic focus within the industry, by increasing shipments for dedicated
in-house projects. Previously championed by First Solar, SunPower, and Canadian
Solar in recent years, this model provides PV manufacturers with the
flexibility to choose between shipping product for in-house projects, or to
third parties that use the modules for their own projects.
17 of the top 20
solar PV module suppliers to the industry now have dedicated project business
units or subsidiaries that are tasked with PV systems deployment. Some Chinese
suppliers are currently spinning out downstream business units in preparation
for initial public offerings (IPOs).
During Q3’14, the
top 20 solar PV module suppliers, which have approximately two-thirds of global
demand, shipped almost 8 GW of modules. This quarterly shipment volume
marks yet another record for the top 20 supplier group, despite increased
shipment levels now for in-house projects.
Solar PV project activities have been a key focus
for a select group of leading module manufacturers in recent years, in
particular First Solar and SunPower. Revenues from downstream business
activities have been instrumental in helping to navigate through the industry
downturn, when margins from pure-play manufacturing were negatively impacted
due to rapidly declining module prices.
However, revenue recognition from project activity
using in-house modules provides an additional level of accounting conditions
that need to be satisfied, compared to simply shipping product to third party
developers. During 2014 however, this flexible approach has seen greater
popularity, in particular from leading Chinese and Japanese suppliers, with the
scope for future revenues upon project completion.
Having a strong presence in downstream project
development also allows companies to benefit from favorable solar PV incentives
available in domestic and international markets. Similar to dedicated project
developers, this allows the option to hold projects, spin-off the assets into a
yield company, or simply sell the projects upon completion to institutional
investors.
