Bipv Europe 2008: Frost And Sullivan

The Future of Solar Technology in Buildings: Fast and Strong Growth When Recession is Over Hammam Ahmed, Research Analyst Akhil Sivanandan, Research Analyst Environment and Building Technologies May 14, 2009

Focus Points European Market for Solar Technology in Buildings     

   

Market Segmentation Market Definitions Key Market Forces – Drivers, Restraints and Challenges Market Revenue Projections and Trends Technological Trends Market Trends Competitive Analysis Current and Upcoming Research Question and Answer

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Solar Technology in Buildings Smart Buildings

Building Controls  Building Automation  HVAC Controls  Lighting Controls

Intelligent Buildings

 Home Automation  Integration

BTech ‘Products’  HVAC  Lighting  Refrigeration  Smart Materials  Communication technology

Services • Energy management • ESCOs • Performance contracting • Consulting • Retro-Fitting

Micro-Renewables Green Buildings

 Solar PV/BIPV  Solar Thermal  Heat Pumps  Biomass  Wind

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Technology and Growth Roadmap 2009

1980

1990

2000

2020

Enhanced Management

IT Convergence

MicroGeneration

Functional Controllers

2010

Construction & Operational Efficiency Building Automation

Low Energy Lighting

Energy Management

Evolution of Building Technology Markets

Smart Towns Smart Grids

MicroRenewables

HVAC Control Building Management & Control

Home Automation

Security Convergence

Building Automation

Intelligent Buildings Energy Control

Systems Integration

Building Control

Intelligent Green Buildings

Green Buildings

Building Performance

Integrated Networking

Smart Buildings

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Market Segmentation Technological Segmentation Building Integrated Photovoltaics

Application Segmentation • •

Residential Commercial: • • •

•

•

Public: •

•

Hotels, restaurants and bars Shops Offices Warehouses Public buildings, airports, monuments etc.

Others •

Industrial, off-grid.

Solar Thermal Systems

Regional Segmentation •Germany •France •Italy •Spain •United Kingdom (UK) •Scandinavia (Finland, Sweden, Denmark and Norway) •Benelux (Belgium, the Netherlands and Luxembourg) •Rest of Europe (Greece, Portugal, Central and Eastern European Countries)

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Solar Thermal Systems (STS) Definitions Solar thermal systems are systems that are designed to produce hot water for heating and/or sanitation. Systems can be installed to serve a range of buildings from single domestic proprieties to large scale district heating. There are two main types of solar thermal systems often referred to as passive and active or natural circulation and forced circulation, the main difference lies in whether the systems rely on pumps or only thermodynamics to circulate water through the systems.

A STS system consists of the following components: • Solar Thermal Collector / Solar Panel • Water Storage Tank / hot water cylinder • Controller / Regulator system • Pump • Pipe Work

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Building Integrated Photovoltaics (BIPV) Definitions For the purposes of this study, BIPV systems are defined as only those particular PV installations that are integrated into the envelope of a building, this serving a secondary purpose such as a roof, facade, shading system etc. The market revenues have been defined from the module manufacturer downwards. These include solar module, inverter and balance of system (BOS) components manufacturers.

A BIPV system consists of the following components: •PV array (PV module and waterproofing elements) •PV combiner or junction box •Grid inverter •An import/export meter (used in the case of net metering or feed-in tariff implementation) •Grid connection.

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Top Market Challenges Heavy reliance on Government support Increasing expertise in installation and maintenance

Overcoming low public and government awareness

EUROPEAN SOLAR IN BUILDINGS Overcoming consumer mistrust due to sale of substandard or poorly installed products

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Need to develop low cost solutions to suit current financial climate

Creating uniform standards for systems

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Force Field Analysis Total Building Solar Market: Key Drivers and Restraints (Europe), 2008

Regulations and incentives

Environmental concerns

Volatility of Energy Prices

Restraints

Restraints

Low awareness in certain regions

Drivers

Drivers High initial investment

Current financial crisis

Stagnation in construction sector

Facilitated credit access

Short term impact Long term impact

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STS Solar Thermal Systems Market Analysis

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Drivers and Restraints Drivers • • •

Government support New entrants from adjacent sectors Mature technology

Restraints • • •

Disruption in financial incentive schemes Lack of end user awareness Reluctant installers

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Revenue Forecasts

Revenues

2,500

Revenue growth rate

50% 40%

2,000 Revenues (€ Million)

30% 1,500

20%

1,000

10% 0%

500

-10%

-

-20% 2006

2007

2008

2009

2010

2011

2012

2013

2014

In the first 3 quarters of 2008 the market performed exceptionally well particularly in Germany The market for STS was estimated to be worth € 958.9 million in 2008, and is expected to grow at 15 % CAGR between 2008 and 2014. The market is forecast to slowdown throughout 2009 and 2010 but will take up speed between 2011 and 2014. This forecast is based on the assumption that the global economy will recover in 2010.

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End user Analysis 87% Large collective District heating

1%

2%

10%

A/C and industrial process heating STS for single family houses

•Single Family houses: The largest market opportunity sector is in small domestic single-family systems which held approximately 88.0% of the market share in 2008. • Large Collective STS: The commercial and large collective systems sector is likely to expand but will not be able to grow as much as the small domestic systems segment. This is based on lower levels of opportunity even though commercial systems are generally larger in size. Other sectors: Industrial and district heating accounts for a very small percentage of the market.

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Supply Chain and Distribution Network Analysis Total STS Market : Supply Chain (Europe), 2008 Collectors Manufacturers

Storage tank manufacturers

Pumps manufacturers

Kits manufacturers

Solar thermal system manufacturers

OEMs

Utilities

Wholesalers / Distributors

Renewable energy Firms

Traditional installers

Professional solar installers

Construction companies

End-User / Customer Note: The width of the arrow denotes the importance of the channel

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Competitive Trends

Tier 1 Bosch, Viessmann

Tier 2 Sonnenkraft, Wagner & co, Isofotón, Vaillant, Paradigma Tier 3 Genersys Plc (UK), HELIONAL (Greece), Solahart,(EU), Riello (Italy), Dimas (Greece) Termicol (Spain), CS COSTRUZIONI SOLARI (Italy), Clipsol (France), Helioakmi, (Greece) , Schüco (Germany), AES Solar (UK), Chromagen (Spain)

• • • •

Very fragmented market, there are more than 1000 market participants in Europe with small market shares. Tier 1 comprises of the largest 2 players in the market namely Bosch and Viessmann. The middle tier comprises companies that are leaders in regional markets such as Sonnenkraft which is the market leader in Italy, or companies that are present throughout Europe such as Wagner. The third tier comprises a large number of local players in each country operating at a local level, it also comprises large players from adjacent markets, such as traditional heating systems, who are relatively new entrants to the STS market such as Riello in Italy.

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Conclusions •The market relies a great deal on governmental subsidies and financial incentives. • The largest market opportunity sector is in small domestic single-family houses. • Currently professional installers are the most significant group in the market, they realise the highest profit margins and are still considered the largest buyer group. • Over the past few years, the market attracted a large number of participants from neighboring sectors such as energy efficiency firms, utilities, conventional heat equipment suppliers, tiling and roofing professionals, façade and construction companies. These new entrants are transforming the distribution network and increasing the overall market penetration level. • Independent solar thermal system manufacturers are losing market shares to large OEMs and the market is moving rapidly towards concentration. • In order to diversify the distribution channels and target a wider end user segment, manufacturers should focus on providing training conventional installers and plumbers.

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BIPV

Building Integrated Photovoltaics Market Analysis

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Drivers and Restraints Drivers •

• •

Stable feed in tariff in some regions Increasing awareness about BIPV Facilitated credit access

Restraints • •

•

Cap on installed capacity in certain regions Excessive bureaucratic procedures in some countries Misunderstanding of capability and application of BIPV

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Revenue Forecasts

Market size in 2008 was estimated around €214 million, with an installed capacity of 37.2 MW. The market is very unsteady right now, due to the volatile solar market and economy. Largest markets: Germany, France, Spain and Italy. A slew of new regions where there is increasing support for BIPV will be the main driver throughout the forecast period. The market is expected to have a Revenue CAGR of 18.1 percent during the period 2008-2014. A continued drop is PV module costs will result in slightly reduced revenues post 2008.

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End User Analysis

15%

55%

Residential Commercial Others

30%

•Commercial Sector: The sector has experienced high growth over the last few years, even though it has been overshadowed by the residential sector. The office and warehouse sector has contributed significantly to this sector. • Residential Sector: Supportive legislation in France, Italy and Germany favoring smaller BIPV systems have been a huge boost to this market. The sector accounted for 55% of the market in 2008. The current economic crisis will result in a slowdown in this sector over the next couple of years despite robust support from governments. • Other sectors: Industrial and off-grid will experience steady growth but will keep losing market share over the forecast period. 20

Supply Chain and Distribution Network Analysis Total BIPV Market : Supply Chain (Europe), 2008

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Technological Trends Unlike the STS market, the technological landscape in BIPV is far from established and is constantly changing

Share of PV technologies in BIPV Mono crystalline 50%

40%

1%

Poly-crystalline Thin-film Others

9%

Crystalline silicon is the most used PV cell technology. Other technologies like thin film and cadmium telluride account for less than 10 percent of the total market. • Crystalline Silicon : Between poly-crystalline and mono-crystalline silicon, at present the market share is slightly in favor of mono-crystalline as they are considered more aesthetically appealing by the end consumer. The high efficiency of crystalline technologies compared to other PV technologies and the fact that they are cheaper make them the dominant technology. • Thin Film : Thin film PV cells are mostly used in high end systems where aesthetics are important. As a result they have found a market in prestige installations in offices and public showcase projects. • New Technologies : Cadmium telluride, Copper indium gallium selenide, nano-crystalline cells and quantum dot based cells are some of the new PV technologies that are emerging in the market. 22

Competitive Trends

Tier 1 Sharp, Suntech, Kyocera

Tier 2 Solarworld, Unisolar, Yingli, Schueco, Schott

Tier 3 SMA, Fronius, Sputnik, Conergy, Mitsubishi, Solar watt, Tenesol, BP Solar, Solar Century, Trina, Gaia Solar, Solon etc.

• • •

Very fragmented market, split between large global manufacturers, none with more than 10% market share Large presence of Japanese and Chinese manufacturers Brand recognition and reputation are important in the commercial sector

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Conclusions • The market is highly reliant on governmental subsidies and financial incentives. • The residential market will be hardest hit by the recession, but with most subsidies aimed at this market, will bounce back when the market recovers. Public sector expected to weather the recession better due to large showcase projects as part of green incentives by various governments. • High level of uncertainty for pricing and module availability in the coming years with green incentives in USA and China expected to lead to a huge demand for solar PV panels, which might lead to a supply shortage in Europe. • Huge potential for BIPV in markets like Italy and Greece, these markets are likely to become more important in the next few years. • A large number of new players from the solar PV market especially from Japan and China are testing the waters due to high subsidies in regions like Italy, Spain and France. However, this trend might decrease in the short term until concrete commitments are made in the BIPV sector in Europe or the market recovers. • PV manufacturers have been vertically integrating in order to secure their feedstock supplies and to create new distribution channels in order to increase geographic spread and penetration.

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Related Research • • •

•

Strategic Assessment of Growth Opportunities in the European Green Buildings Markets BIPV Markets in North and Southeast Asia European Solar Thermal Heating Systems Market European Heat Pumps Market

Upcoming Research • • •

Climate Change in Europe – Investment Opportunities Impact of Renewable Energy on the European HVAC Market European Offshore Wind Energy Market

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Chiara Carella Head of Corporate Communications Europe, Middle East & Africa +44 (0) 207 3438314 [email protected]

Juliet Shaw Sales Director Energy and Environment 0044 (0) 20 7343 8363 [email protected]

John Raspin Director Energy and Environment 0044 (0)20 7915 7814 [email protected]

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