TrendForce: Increased Roof-Top PV Market Penetration Rate May Affect Electricity Company Revenue

Impacted by the decreased PV system installation cost and Feed-in Tariff (FiT) as well as increased electricity price, roof-top system market continues to grow in Europe and USA. According to TrendForce’s investigation, the return rate of electricity cost saved from using self-consumption systems in certain regions has become much greater than that of large-scale projects. It shows that the penetration rate of self-consumption segment is increasing.

Since Europe and USA have cut down the subsidy for large-scale projects, project return rate has declined substantially, leaving challenges to large-scale power plants. As indicated by TrendForce’s investigation, the return rate for large-scale projects is around 8%-12% in the German market. Fewer investors are willing to invest in these kinds of projects. On the other hand, due to the decreased FiT, investors have started to ask suppliers to revise the price downward so they can at least maintain the basic rate of return. Currently, module price has dropped below US$0.7/watt and Balance of System (BOS) cost has also declined, which causes system cost to be around US$3.0/watt. Although there are doubts on large-scale project development, roof-top market grows thanks to the decreased system cost and increased electricity price. For example, roof-top system market grew by 85%-90% in 2013 in California, USA.

Furthermore, the growth of roof-top systems may affect the revenue of traditional electricity companies. Based on former business model, traditional electricity companies purchase electricity generated from power plants and then re-sell it to the consumers in order to benefit all three parties. But the increased electricity price and the decreased FiT and power generation cost caused electricity cost saved from using self-consumption systems to be greater than revenues generated from FiT price. Hence, consumers are more willing to install roof-top PV systems. From the current trend, revenue for traditional electricity companies will be impacted. For example, electricity companies in Western Australia have proclaimed their electricity demand has declined. In another word, it can bring larger financial pressure to those who still use traditional electricity. With surcharge fees increasing, it will affect electricity price trend and indirectly create an unfair situation – those who still use traditional electricity will have to pay more electricity cost and grid-connection cost.

Judging from the spot market’s overall performance, since Chinese polysilicon price remained high and suppliers’ January quotation continued to increase, last week’s price reflected an uptrend, with average price reaching US$17.883/kg, a 2.1% rise. For multi-si wafers, supply shortage remained for high-efficiency products. Also, manufacturers have revised the price upward, which caused spot price to continuously rise. Last week’s average price came to US$0.921/piece, a 0.66% rise. For mono-si wafers, last week’s average price declined to US$1.148/piece, a 0.95% drop. For cells, market demand and utilization rate remained high. However, due to the increased wafer price and decreased module price, market price still fluctuated. Last week’s average price came to US$0.388/watt, a 0.26% drop. For modules and inverters, last week’s price decreased for both, with module average price reaching US$0.661/watt, a 1.2% drop and inverter average price reaching US$0.194/watt, a 2.51% drop.