Module prices are at historic lows and global solar installations reached an all-time high in 2016. How does this influence the purchasing decisions of residential solar installers? Allison Mond, GTM Research solar analyst and author of Module Procurement Trends in the U.S. Residential Market, explains.
GTM: How are falling module prices impacting solar module procurement decisions?
Allison Mond: The impact is subtle, but significant. Installers have always managed ongoing relationships with multiple module manufacturers and distributors at one time in order to ensure that they can execute on attractive pricing opportunities as they arise. This is even more important now as module prices are falling so quickly, and installers want to keep their own costs low in order to stay competitive. Installers are looking for module manufacturers who can be flexible on pricing and stay in line with the rest of the market.
GTM: Beyond price, what other factors are residential installers looking for when procuring modules?
AM: The bankability and staying power of module brands are important to all installers. Installers want to ensure that the module brands they use in installations will be around for a long time and can fulfill their warranty obligations. Therefore, it's important for installers to keep an eye on the financial health of module manufacturers, especially given the way that currently low module prices are squeezing module manufacturers’ margins.
GTM: In your research, did you find differences in how national and local installers make module procurement decisions?
AM: There is a wide variation in the module brands used by large and small installers. While the most important factor in the module procurement decision for large installers appears to be price, smaller installers put more weight on additional factors such as panel efficiency and warranty. This is reflected in the panels most widely used by different groups of installers. Trina is the module brand most frequently used by large installers, with approximately 20 percent of the market, while SolarWorld is the most popular brand with small installers, also with about one-fifth of that market.
GTM: As the market continues to move away from leases and toward loans, is it having an effect on module procurement?
AM: The relationship between ownership structure (customer-owned versus third-party-owned) and module brand depends on the installer. In general, customer-owned systems employ a higher proportion of premium panels than do third-party-owned systems. For instance, among mid-size installers, SunPower panels are the most widely used panels for direct-owned systems, at 35 percent. Hanwha Q CELLS panels are the most widely used in third-party-owned systems, at 27 percent. At the installer level, however, this pattern does not always hold true.
GTM: Given these trends between installer size and financing and module procurement, how do you expect the landscape among module suppliers to change in 2017?
AM: Spurred in part by the growth in direct ownership, we're seeing local and regional installers gain market share over the national public companies. In turn, the premium module brands that these local and regional installers primarily use, will gain market share as well.
FIGURE: Top Module Suppliers to the U.S. Residential Solar Market, Q1-Q3 2016
Source: Module Procurement Trends in the U.S. Residential Market
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The report, Module Procurement Trends in the U.S. Residential Market, is available for purchase or as part of a GTM Research solar subscription. Contact solarsubscription@gtmresearch.com for more information.
Allison Mond is a Solar Analyst at GTM Research, focusing on the competitive landscape of the U.S. downstream solar market and leading data collection and aggregation for the U.S. PV Leaderboard. Prior to joining GTM, Allison was a Senior Analyst at Compass Lexecon, an economic consulting firm, where she did research and data analysis for litigation and regulatory cases in the electricity and natural gas industries. Allison holds a Bachelor of Arts degree in economics from Colby College.