The debate continues whether solar modules are essentially fungible commodities or whether they are subject to differentiation. We at SolarTown come down firmly on the side of differentiation among solar panels, but we recognize that there is another side of the story.
We have heard from many installation companies who tell us that cost is the primary driver in their decision to purchase solar panels for installation. Not surprisingly, we sell more discount solar panels at SolarTown than any of our other panels. These would include panels manufactured by Conergy, Trina and Canadian Solar.
And financial analysts at Morningstar.com clearly embrace this “solar modules are commodities” view. According to their report on Yingli, the mother of all discount solar panels: “As solar modules are effectively commodity products, it’s hardly surprising that China has come to dominate the industry. We estimate that on average, it is 20%-30% cheaper to produce a solar module with traditional silicon module technology in China than in Europe or Japan.” So the stock price of Yingli is up 24% this year, and Trina is close behind at 23%.
In accordance with this view, solar modules are interchangeable and you need not go any further than the price to make your selection. If you subscribe to this view, then the cheaper the better. But there is a competing view.
We have started to hear from manufacturers who are betting that consumers will pay more for home solar panels for an improved product. In last month’s, Solar Today Magazine, the leading headline was “Differentiation Ahead for PV Modules.” The author of the article, Jay Holman, properly points out that with “the potential for an oversupply of modules in 2011, it could be business practices that differentiate between bankable module manufacturers as much or more than pricing.” Cost reduction may still lead the way, but other indicators may increasingly play a role in the consumer’s decision to purchase one solar panel over another.
In an effort to help SolarTown customers begin to distinguish between solar modules, we are constantly updating our table allowing homeowners to compare before they buy solar panels. In our table, consumers can compare solar panels based on area. You want to be able to get more panels on your roof, but you also want to make sure that your roof can withstand the additional weight from the panels, especially if your home has a flat roof. Manufacturers seem to ignore the aesthetics part of the equation, but this factor looms large especially for those homeowners who have a southern facing roof that is visible from the street. These homeowners generally prefer the uniformity of a black module, which are usually monocrystalline. And of course, the efficiency and expected output of panels are very important criteria in making an educated decision about which panel to choose. Finally, some customers are partial to American-made panels or at least not Chinese-made panels.
Holman in his article cites several other potential criteria on which manufacturers may compete such as reliability or increased safety. He describes how manufacturers are adding “intelligence” to their solar modules in the form of integrated microinverters and DC optimization devices.
The problem of course for these manufacturers who want to step up their game is that there is currently an oversupply of modules and prices are falling so that the price differential between those panels competing on cost and those competing on other factors is even more pronounced. We recently listened to an effective presentation from representatives of Conergy, which recently introduced the Conergy PowerPlus module. Conergy manufactures this new line of panels in a state of the art facility in Germany. The PowerPlus indeed offers some major improvements over existing panels, and Conergy can rattle these improvements off quickly, including power tolerance, better ventilation, better construction, better performance in low light conditions and other factors. And you can get this better module for less than a 10% premium—now seeing that you may have these solar panels on your home for 25 years, we think that this premium is a price worth paying.