Dr. Finlay Colville, Head of Research of PV-Tech & Solar Media Ltd. spoke exclusively to energypress about what makes a photovoltaics supplier “bankable” in today’s environment and what are the most important technological drivers.
Dr. Colville, what exactly do we mean when we say “bankability” in photovoltaics in today’s environment?
The term bankability has been one of the most confusing and misused terms in the solar industry for a long time. Until now, there has been no industry-accepted definition and as such, almost every company – from very small to very large – will claim to be ‘bankable’. The best way to think about bankability as a solar module supplier is to compare with financial institutions that get credit ratings scores as secure lenders or business partners. Essentially, a solar module supplier needs to be a secure bet, when selling its product to the market. This is essential for solar as the payback to end-users can range from 5 years to about 20 years sometimes.
In solar, bankability really has two parts. First, the module supplier should be financially stable, meaning that the company is profitable, has manageable debt levels, and has ready cash to spend on capacity expansions, new technologies and global sales and marketing activities. Secondly, the module supplier should be technically strong, by offering modules that have the highest powers and best reliabilities. The larger the solar sites – such as utility-scale ground-mount projects over 50-100 MW in size – the more important this is today. Investors want to know that their module supplier is not offering ‘yesterday’s’ technology. The solar industry moves very quickly and the market-winners are always driving next-generation performance levels.
So bankability is a combination of financial and manufacturing/technology strength. To be a highly bankable module supplier, the company has to have both these in place at the same time. It is not okay to have one, and not the other!
How have four companies achieved a level that separates them so much from the rest of the “herd”?
Bankability is mainly a term used for large-scale solar projects, and especially for utility-size sites where institutional investors are involved. While there are about 400-500 companies globally trying to make modules today, only a small sub-set (about 20) have the ability to sell sufficient product for 100MW-plus sites. If we start looking at being able to sell to these size of sites globally – not just within China or India for example – then this list of 20 goes down to about 10 or less today.
These ten companies typically have in-house solar cell and module capacities of 5GW or more, with some now shipping between 10-20GW of modules per year.
Of this group of about 10 companies, just a few (four, at the end of 2019) had the highest bankability ratings (AA-Rated) that implied strong finances and large shipment volumes to global utility sites.
These companies are differentiated from the rest – the herd if you like – by having multi-GW of global shipments (outside China) each year, and being focused on large-scale utility-solar sites, where bankability and investor-confidence is most critical.
Which factors do developers have to take into account when choosing a module supplier in order to minimize risk? How is it different for them to have an A level supplier than a B level supplier, for example?
Developers, or more specifically investment vehicles used by developers and EPCs to build sites, look at manufacturing and financial stability, the power level and reliability of the modules being offered, the ability of the company to ship up to several hundred MW of product within a short period of time, and they also undertake due-diligence on product quality. This due-diligence often involves the investors engaging with third-party factor auditors, test laboratories and reliability centres.
Generally, the A-Rated suppliers will have best chances of delivering high-quality and reliable products on time. B-Rated companies are more likely to come into consideration for smaller sites, and also commercial rooftop projects were volumes and due-diligence is less crtitical.
And of course, they look at price! Solar module prices have been coming down every year and it is often a balancing act between module power level and price, and the price at the delivery time of the product.
Where do you see the global pv market moving to in terms of technology and competitiveness?
Technology is constantly moving forward, and cell efficiencies and module powers have been going upwards rapidly since 2015. There are many small changes companies are making to the existing generation of mainstream products, by enabling light absorption on both front and rear sides now – so-called bifacial products – and making small changes to materials and components that make up the cells and modules. Every small change gives an extra tenth or so of a percentage to the cell efficiency now.
Also, module suppliers are offering larger module formats, or are getting more cells into products. A few years ago, modules were using 60 solar cells, and generating about 250W of power. Now, the modules have 72 cells or more and can produce more than 400W. And at the same time the price has been coming down.
So, for module buyers, it has been a wonderful time – getting more for less!
There are some new technologies being pushed that would see higher purity wafers being used for the cell manufacturing stages, closer to the quality of wafers used in the semiconductor industry, and where cell efficiencies would move up by a few percentage points. This would result in module powers above 500W. Some companies have started small production volumes here, and are working on getting the manufacturing cost structures here competitive. This is likely to take a few years however. In the meantime, it is the small changes to the existing mainstream silicon-based technologies that are most interesting and useful.
In terms of competitiveness, there are a small group of module suppliers that are moving away from the others, in terms of manufacturing capacity levels and global module shipment volumes. This is likely to result in about 4-5 module suppliers having 20GW-plus shipments each in a couple of years from now. This will probably be a key point in terms of these companies being the only ones that can build the increasingly-larger scale needed for utility solar sites.
The industry will always be highly competitive however, regardless of shipment volumes being offered. Solar module manufacturing is a tough business to make money from and everything needs to be right at the same time for this to work. So, the drive to have higher module powers and lower manufacturing costs will probably never go away!