Massive oversupply and downward price pressure have created the misconception that the solar industry suffered from industry-wide commoditization. But not all solar modules are created equal, and profit margins can rise to double-digits for select enabling materials - even as overall materials sales volumes grow at a compound annual growth rate (CAGR) of 9.2% through 2018, according to Lux Research.
While materials such as frontsheet glass, polysilicon and ethylene vinyl acetate have the lowest profit margins, certain gases, metals, polymers, and process chemicals and solvents maintain double-digit margins. In fact, since mid-2009 solar materials have seen steadily increasing profit margins, with the exception of glass and polysilicon, the firm said.
"While certain solar materials are commodities, many others still offer opportunity for differentiation and high margins through added performance," said Fatima Toor, Lux Research analyst. "Innovations in high-performance encapsulants, backsheets and metallization pastes enable higher profitability by allowing module makers to improve efficiency and command higher prices."
Lux Research also examined key trends in solar materials technology and the IP landscape, and analyzed how these innovations affect profitability. The right materials can drive higher efficiency and innovative solar materials can have a dramatic effect on module efficiency. For example, high-performance encapsulants can enhance module efficiency by up to 1% absolute, while innovative backsheets can improve module efficiency by up to 3.5% absolute and improved metallization pastes by 3% absolute, the firm noted.
