Thursday, 06 October 2016 04:06

Solar Impacts on the Global Glass Market

The global glass market is broken into several facets including container glass, specialty glass, reinforcement glass, and others. The global market is estimated at 145 million tons of glass produced in 2015. One type of glass in particular is expected to experience a market boom in the coming decade, flat glass. Flat glass accounts for about one-third of the global glass market, and demand exceeded $72 billion in 2015, with 65 million tons produced. The flat glass market has several end-users including the construction, furniture, and automotive industries. The construction industry, specifically building windows, accounts for 70% of the flat glass market.

Solar Glass

The solar industry accounts for only a small percentage of the market currently, but will double by 2020 with a compound annual growth rate (CAGR) of 13%. There is tremendous growth opportunity in this area. The solar industry, while accounting for a small amount of the overall flat glass market, is poised to become a dynamic part of the flat glass market in the coming decades. To put this in perspective, we expected the other end-users to either maintain their place in the market or decline slightly with automotive and construction having a CAGR of 0% in the next five years and the furniture market experiencing a negative CAGR of 1%. The solar industry is positioned to be one of the most dynamic end-users of flat glass for not just the next five years, but the foreseeable future based on our projections.

With regard to the solar equipment market, solar glass only accounts for 3% of the total equipment market. That being said, the market will grow significantly by 2020 for a CAGR of 16%, the largest growth rate of any type of equipment in the solar industry (semiconductors, inverters, etc.).

The glass industry is poised to benefit from the growth of the solar industry in particular due to the fact that advances in glass and glass coatings have the potential to increase the efficiency of certain modules, thus making them more attractive to buyers. Some glass companies such as Asahi Glass Company (AGC) and Nippon Sheet Glass Group (NSG) boast their products can improve efficiency from 2.5-5%. Considering that efficiencies range from 6-20% on commercially available modules (depending on type), a 2.5-5% increase in efficiency due to glass advancements is remarkable.

Demand for Renewables: The Growth of Solar

What’s going on with the solar market in general that will lead to such growth for the flat glass market? With a renewed interest in alternative energy by many countries across the globe, demand for solar energy (and other renewables) will increase in every region in the coming decades. In 2015, approximately 57 GW of solar capacity was added to the grid, for a total of almost 225 GW of cumulative capacity. By 2020, total installed capacity will more than double. With these projections, demand for glass in the solar industry will increase as GW are added. Such rapid and sustained growth in this industry will affect all facets of the solar module including polysilicon, inverters, batteries, and glass.

Game Changer: Frameless Panels

Both first and second-generation panels use glass. First generation cells make up 90% of the solar market in general and 80% of the solar flat glass market (712 kilotons of the total 890 kilotons of flat glass produced in 2015 for solar applications). Conversely, second generation cells makes up less than 10% of the market and 20% of the solar flat glass market. That being said, we expect to see the most rapid growth for glass applications in second-generation cells, with a projected 940 kilotons produced for second-generation cells by 2020. The reason why second generation cells make up 10% of the solar market by 20% of the flat glass demand is due to advances in frameless glass-to-glass laminates in the thin film market, which also will affect the first generation market.

Frameless, or dual glass, panels encapsulate the cell in glass, as opposed to the traditional polymeric backsheet with an aluminum frame surrounding it. The backsheet has been replaced by another sheet of glass, essentially doubling the amount of glass used for the cell. In fact, due to the fact that there is no frame, the glass on these panels is often slightly thicker in order to support the panel. Companies that manufacture frameless dual paned panels boast that they have a nicer look, are a safer panel (due to the fact that there is no grounding needed), and enjoy a lack of potential induced degradation (PID), making them theoretically more efficient. Frameless dual paned panels are relatively new to the market. To date only a few of the major companies have adopted these types of panels. Trina Solar and Canadian Solar both offer frameless panels.

The major obstacle to frameless panels becoming more popular is that the lack of frame affects the entire balance of systems. This can be problematic for mounting systems and trackers. Some companies such as Array and Schletter do offer systems for frameless panels, but these are still considered niche products.

Solar Glass Pricing: Assumptions and Models

There are several different ways to approach predictive modeling for the solar glass industry. One way to think about it is to simply calculate pricing per square meter of glass and factor in growth in GW of the market.

In taking one square meter of glass we can assume it will generate between 150 and 175 watts, we will assume 6 million square meters of glass per GW of solar energy. Solar glass pricing has been relatively volatile over the past five years, ranging from almost $11/sq meter to a major drop due to oversupply. Two major factors will play a role in the solar glass market over the next decade: (1) pricing—we predict pricing to fall from the $11/sq meter pricing from a few years ago and level off from the low of current years and then begin to steadily rise. This will result in a growing market for the solar glass industry, particularly if added capacity stays on the trajectory on which it is currently; (2) dual glass panels—if dual glass panels become more ubiquitous, the solar glass industry will grow at a significant rate.

Industry Dynamics: The Big Four and New Entrants

What does the rise of solar glass mean for the flat glass market in general? Asahi, Guardian, Saint-Gobain, and NSG/Pilkington comprise over 60% of the flat glass market. All of these companies are major flat glass suppliers writ large; the solar section of their production is very small. The industry dynamics are not currently conducive to these four maintaining their preeminence in the solar glass market. That being said, they are likely to maintain their edge in the glass market as a whole.

There are low barriers to entry for solar glass currently. This is for two main reasons: 1. Because the solar market is increasing, the demand for glass will increase, and 2. Because the main glass companies are not focusing on solar glass, there is a void that can be filled with companies that are solely focused on glass products for the solar industry. Because 70% of the modules produced today are currently built by Asian companies we can expect to see many companies entering the market in the Asian Pacific region due to transporting ease.

Conclusion

Even though solar glass makes up a small percentage of the flat glass market worldwide, we project that demand for solar glass will grow faster than any other end-user of flat glass in the next five years. Due to an increased interest in renewable energy and over 100 countries instituting economic incentives for alternative energy advances, solar energy will see major growth in the coming years, and with that, advances in module technology will put a demand on solar glass that will need to be met not only by existing companies, but also by new entrants to the market.

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