Solar market share shifts seen in California

30 November 2009 | By Mark Osborne

As the dominant state for solar module installations, California is the most competitive region for companies marketing their solar modules in the U.S. Until now, SunPower with its network of distributors and project knowhow has been the leading module supplier in the state but things are starting to shift rapidly, and SunPower is in danger of losing the number-one slot. However, SunPower is not alone in losing market share; a growing list of other name brands are set to see lower share of the market in ’09 compared to last year.

Quarterly figures from the California Solar Initiative (CSI) and part of the Go Solar California campaign that is overseen by the California Public Utilities Commission and highlighted in a new report from Barclays Capital analyst Vishal Shah reveal the volatility in market share positions on a quarterly basis.

The first chart shows that SunPower has been the most consistent retainer of market share throughout the year, yet will see a 3% decline in Q4, compared to its 17% peak in Q2.

The problem for SunPower is that its market share for 2008 stood at 22%, significantly ahead of its nearest rival Sharp, which had 16% share, and considerably ahead of all other major players, with none capturing more than 9% of the California PV market.

The most drastic swings come from SolarWorld, which started the year with an impressive 26% share of the market in Q1. However, this fell to 1% by Q3, only to bounce back to 11% share in Q4.

Other mainstream producers that have showed quarterly inconsistencies include Suntech, Mitsubishi, Sanyo, Sharp, Schott and BP Solar.

A couple (Evergreen Solar and First Solar) have shown consistent share gains in the first three quarters but share declines in Q4.

Only Kyocera, which started the year at 3% and is expected to finish Q4 at 7% share, has demonstrated quarterly sequential market-share increases. However, bringing 2008 share results into play, Kyocera will have actually lost share in ’09 (see chart 2).

Year-on-year market-share data show several other trends. Evergreen, Kyocera, Mitsubishi, Schott and SunPower all will have market share declines in 2009, compared to the previous year. Unfortunately for SunPower, its loss in share is the greatest.

This market share loss allows Sharp to tip SunPower with 17% share, compared with SunPower’s 16% overall share for the year.

Others are also closing the gap on SunPower. Suntech will see strong growth in share in 2009, topping 11% of the market. Others experiencing share growth include SolarWorld, despite the volatility on a quarterly basis. First Solar and BP Solar also show moderate share gains over 2008.

Why the decline for SunPower?

Although no ‘official’ analysis was made by CSI or Barclays, having simply collated the figures for review, one key aspect for the share decline could be the premium prices that SunPower commands due to its industry-leading conversion efficiencies and market brand awareness.

That might sound contradictory to the notion that if a company has leading efficiencies and a leading brand, then price premium applies and therefore revenue and margins can be strong.

However, the price declines for modules, coupled to efficiency gains of its rivals, are starting to put the squeeze on SunPower, especially from Suntech and ‘others’ category, which we would assume covers many China-based module producers.

SunPower may have the cell/module efficiencies but also has high-cost manufacturing, which would also suggest it is slower at implementing production cost-cutting measures compared to its rivals.

Significant price declines achieved by some of its competitors are helping to generate the market share shifts in 2009, while SunPower hasn’t been able to keep pace.

2010 is shaping up to be another interesting year for California, since many of the large-scale utility projects could well get under way and the likes of thin film leader First Solar could see strong megawatt and therefore market share gains in the state.

Suntech could also see further gains as its Pluto cell technology is ramped across its production lines and its cost/scale reduction plans help to reduce prices. Not forgetting as well that Suntech will be producing modules in the U.S. in late 2010, which should also help its share position in 2011 and beyond.

SolarWorld should also benefit from its U.S. manufacturing base and capacity additions to meet demand and therefore has a good chance to grow market share.

Don’t make the mistake of giving up on SunPower just yet! However, the market is getting tougher, and it will be interesting to see how tough SunPower becomes in 2010, when its planned cost reduction strategies will need to be executed to the max.