Who’s on first, what’s on second and why it does and does not matter

by Paula Mints

Sizing the supply side of the global PV industry has never been easy. As annual shipments grew to gigawatt heights outsourcing increased in tandem making it almost impossible to settle on a reliable number for the size of the industry in any given year.

Outsourcing, a common practice in all industries, takes place when one manufacturer buys a product or component from another manufacturer.  In the PV industry, manufacturer A buys cells from manufacturer B, assembles the cells into modules and includes these modules in its in-house production.  When both manufacturers report the resulting megawatts as their shipped product, the industry is instantly oversized. Since most manufacturers engage in outsourcing, the practice compounds and obscures the real capacity of the industry.

Figure 1 (below) provides an example of how easily the PV industry can be made instantly bigger by double counting.  In Figure 1, Trina, Canadian Solar, Jinko, Renesola and Yingli have a combined 9.1 GWp of c-Si cell manufacturing capacity and a combined 15.3 GWp of module assembly capacity for an excess of 6.2 GWp of module assembly capability.  These manufacturers will buy cells from other sources and include them in their production.

In contrast, NeoSolar, Gintech, TopCell, E-Ton and Inventec have a combined c-Si cell manufacturing capacity of 6.3 GWp and a combined module assembly capacity of 2.1 GWp for excess cell manufacturing capability of 4.2 GWp. The manufacturers with excess cell capacity ship cells to the manufacturers with excess module assembly capacity and everyone reports everything. And thus the PV industry has been oversized on an annual basis for decades.

Figure 1: Select Manufacturer 2014 Crystalline Cell and Module Assembly Capacity

One misunderstanding that contributes to the annual oversizing concerns what should be counted.  A cell without a module is not going to be mounted on a rooftop, but a module without a cell can’t generate electricity.  This is not a chicken and the egg conundrum. The size of PV industry shipments (or sales) annually is limited by its semiconductor — that is, crystalline cell or thin film panel capacity. 

Unfortunately, there is still a misunderstanding about the difference between module assembly capacity and cell manufacturing capacity.  Twenty years ago almost 100 percent of the crystalline manufacturers assembled their internally manufactured cells into modules.  Currently, manufacturers, particularly in China, are adding significantly more module assembly capacity than cell manufacturing capacity.  In the case of China, given the tariff constraints its manufacturers face globally, it makes sense to include production that allows for the acquisition of cells from other regions such as South Korea and Malaysia.  Figure 2 presents module assembly capacity shares by region for 2014.

Figure 2: Global Module Assembly Capacity Shares 2014

Figure 3 presents 2014 module assembly capacity (100 percent dedicated to c-Si), crystalline cell manufacturing capacity, thin film manufacturing capacity, announced shipments, cell/thin film shipments from 2014 production, shipments plus 2013 inventory and 2014 inventory. 

Figure 3: PV Industry 2014 Supply Statistics

In Figure 2, there are 51.3 GWp of announced shipments and 40.2-GWp of shipments from in-house c-Si cell and thin film production plus the previous year’s inventory. The reason for the 11.1-GWp difference is this: manufacturers bought cells and/or modules from other sources and included the acquired product in their shipment announcement, while the original manufacturer also reported the product in its shipment numbers. 

Does It Matter Who’s on First?

The annual lists of the top ten PV manufacturers becomes irrelevant if the origin of the product being reported becomes so convoluted that no one knows the genesis of anything.  The lists are typically comprised of the same manufacturer names, but, as these lists are based on different methodologies, the names are almost never in the same order. Some specificity concerning what is being ranked is necessary in order to give these lists meaning. Without specificity the lists just do not matter.

As the module without cells is an empty frame, it is important to know who manufactured the cell in the first place. One reason that this is important is quality. A photovoltaic module is an electricity producing product that is expected to reliably generate electricity for at least 25 years.  Products that carry this responsibility for reliability and longevity need to be clear about their pedigree.  This should be a matter of pride, but if quality issues arise it may be a matter of necessity. The fact is that once the module is assembled it is very hard to know who the original cell manufacturer was unless, of course, the module assembler reports these statistics. Who’s on first does not matter as much, frankly, as who’s cells are inside of whose modules. 

Why We Like Big Numbers

Constant growth has been the PV industry mantra for years even though, slower stable and profitable growth is a better path. The desire for ballooning growth is one reason that double counting of shipments is tacitly accepted by everyone. After all, referring to the previous example, 51.3 GWp is more impressive than 40.2 GWp (shipments from annual production plus previous year inventory) despite the fact that it was arrived at by counting the same cell once, twice, maybe three times.  Considered through the lens of bigger-is-better, the 38.9 GWp of shipments from 2014 production (not counting inventory) is downright penurious. 

That the annual celebration of ever bigger numbers has come hand in hand many years with low to negative margins is typically ignored until blatant — and never mind that it is almost impossible to figure out the real cost of producing anything in the PV industry.

We like big numbers because they symbolize success. Unfortunately, big numbers are often a façade obscuring failure.  The real success is the ability to point to PV modules that have been in the field for over 30 years reliably generating electricity.  This sort of success offers proof that photovoltaic technologies are not the future, this technology is the electricity generating technology of now.

The real danger of big numbers is that they are both addictive and self-fulfilling.  Addictive because the attention they garner feels good, self-fulfilling because of the tendency of people to look for data to support their beliefs.

So, who’s on first, what’s on second matters less these days primarily because the numbers have been combined and recombined often enough to render them meaningless.  The same confusion exists on the demand side of the industry, where multi-megawatt projects are sold and resold and therefore counted and recounted, while the difference between a grid connection and an installation is sometimes misunderstood.  The point is — and should be — quality up and down the value chain. 

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