Having recently completed a road trip that took in Korea, Taiwan, China and Japan, two key issues emerged as common themes.
- Interest in the PV industry continues to exist for both new and existing industry players.
- Companies are starting to turn attention away from the industry downturn and towards new opportunities.
Many of the questions and discussions concerned the second point, as both upstream and downstream players are looking to enter new markets and capitalize on developing markets. The markets that came up most frequently in discussions were Japan (the current ‘hot’ market), the U.S., and Southeast Asia.
In terms of Japan, most of the interest surrounded the sustainable nature of that market’s growth and whether a ‘bubble’ was forming. While Japan’s market is growing rapidly, it does have a somewhat unique situation in that the power from PV plants is very much needed as power from conventional sources (i.e. nuclear) declines and the regulatory and physical infrastructure is already developed to accept multi-gigawatts of new capacity coming online each year. While the specifics of the FIT policy which has driven the demand growth are likely to change, the Japanese market is set to continue to install at the multi-gigawatt level for several years as the project pipeline for the FIT continues to develop even if the FIT rate does decrease in the coming years.
Conversations about the U.S. covered a variety of topics such as the nature of market growth, policy fragmentation, opportunities to enter the market, and long-term prospects. The U.S. market has strong long-term growth potential but is unique in its structure. The fact is that no singular U.S. market exists: rather, 50 state-level markets exist, each having their own PV-specific incentive policies and regulations. This differentiation means that understanding the market at the state level, including specific policies, customer segmentation, and long-term demand potential, is essential. Industry players must understand which segments their products/services will best address as well as where these products/services will be able to seize upon opportunities. While there are challenges in entering a market such as the U.S., the long-term rewards are significant and sizeable opportunities exist for industry players that have a sound strategy and the proper background to capitalize on the market.
Southeast Asia is similar to the above markets (in that opportunities exist) but is very different in that demand is spread across many countries. The state of early development offers opportunities for industry players that want to enter and develop new markets with the goal of reaping benefits once demand in these countries starts to increase. However, this also presents challenges in that significant levels of demand may still be several years off and patience and groundwork are needed to develop these markets.
The conversations, presentations, and questions during the past several weeks have shown just how much life is still left in the PV industry. Many players are now looking to new opportunities and crafting strategies to grow with the industry recovery. Understanding how downstream markets operate in terms of policy as well as customer needs is essential for industry players looking to grow and expand.