U.S. a top destination for solar panel manufacturers
The report, from GTM Research, noted that close to 10% of the world's new module manufacturing projects this year are slated for the U.S.
“The U.S. is a very attractive country for manufacturing and ranks higher than any other high-cost country because of its robust domestic demand and access to markets globally,” said report author and GTM Research solar analyst Mohit Anand.
According to GTM Research's report the top five nations are China, Singapore, Taiwan, Malaysia and the U.S.
Importantly, all the announcements for new solar module manufacturing ventures were outside of China, and included the U.S., India, Thailand, South Korea, Malaysia, Taiwan and Brazil. However, in the coming years, China and the rest of Asia will still have 77% of all PV (photovoltaic) solar panel manufacturing.
“Anything that helps grow domestic demand, including an extension of the federal Investment Tax Credit, would further support U.S. attractiveness to manufacturers,” Anand stated.
The federal Investment Tax Credit (ITC) is often cited as a major factor in spurring solar power adoption, but it is set to expire next year. The ITC, passed in 2008, offers a 30% tax credit for residential and business installations for solar energy. When it expires in 2016, the tax credit will drop to a more permanent 10%.
In fifth place for manufacturing "attractiveness," the U.S. provides significant access to heavy domestic demand, as well as access to markets globally, attractive government support for PV manufacturing businesses, and "an excellent business environment," GTM's report noted.
In the past few years, however, two factors began to alleviate a global oversupply of PV modules: First, consolidation and facility closures tightened the supply as module prices fell from 2012-2014; and global photovoltaic demand is expected to increase substantially over the next five years, leading to a 135GW (gigawatt or a billion watts) market in 2020. Today, PV installation worldwide amounts to at most 57GW, according to IHS Research.
"Even when accounting for already-planned module capacity additions, this could lead to a supply crunch toward the end of the decade," Anand said in his report. "Whereas an ideal market has excess module capacity of between 30% and 70%, our base case forecast results in 26% excess capacity in 2017 – a scenario that would likely lead to price pressure and potential module shortages in some markets."
By the end of this year, IHS Research predicts that PV demand will grow at a double-digit rate of 16% to 25% and installations in the range of 53GW to 57GW.
Geographically, the largest markets for solar consumption are China, Japan and the U.S., while the largest contributors in terms of growth will be China, the U.S. and India.
"China faces stiff competition from Singapore, Taiwan, Malaysia and the U.S. on business environment and PV manufacturing support scores," Anand said. "As widespread manufacturing support like low-cost loans and cheap land for solar manufacturing by the government, especially for domestic companies, scales back, China runs the risk of slipping from the top-ranked position."
China isn't likely to lose its spot to the U.S., though, as the Asian economic giant enjoys a significant cost advantage over the U.S.