BIPV Roofing Markets - 2012

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BIPV offers both the PV industry and the building products industry a way out of their current economic plights. For PV firms, BIPV provides a product strategy geared to adding value to products. For the building products industry, BIPV represents a new line of products that will enable construction firms to add saleable features to buildings of all kinds.

While all this is true of all BIPV products, there is a natural migration path from today’s rooftop PV panels to BIPV roofing. With this in mind, NanoMarkets is publishing this report, which identifies and quantifies the market opportunities for BIPV roofing.

The report discusses a roadmap for BIPV roofing in which business revenues are generated initially by simple overlay products and then by conventional rigid and flexible BIPV roofing products and finally from fully integrated products. The report also shows how the performance of BIPV roofing is expected to evolve with a special focus on lifetime requirements and the materials that will be used both for substrates and absorber layers.

This report also includes extensive forecasts of the BIPV roofing market in terms of wattage, area covered and revenues generated. Breakouts are provided by type of building, type of BIPV roofing and key materials used. In addition, we project the nations and regions that will generate the most revenues for BIPV roofing and the breakouts of the BIPV roofing market by retrofit and new construction. As usual with NanoMarkets reports, this report also includes a detailed assessment of the strategies of the leading firms currently supplying BIPV roofing products.

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BIPV Roofing Markets - 2012

  1. 1. NanoMarkets Report BIPV Roofing Markets – 2012 Nano-543Published June 2012
  2. 2. Entire contents copyright NanoMarkets, LC. The information contained in this report is based onthe best information available to us, but accuracy and completeness cannot be guaranteed.NanoMarkets, LC and its author(s) shall not stand liable for possible errors of fact or judgment.The information in this report is for the exclusive use of representative purchasing companies andmay be used only by personnel at the purchasing site per sales agreement terms. Reproductionin whole or in any part is prohibited, except with the express written permission of NanoMarkets,LC.
  3. 3. Table of ContentsExecutive Summary ...................................................................................................... 1 E.1 BIPV Roofing as a Way Out of the PV Industry Slump...................................... 1 Page | i E.1.1 The Business Case for BIPV Roofing and the Future of Chinese Competition 1 E.2 Prospects and Opportunities for BIPV Roofing Products ................................ 2 E.2.1 BIPV Roofing Overlays .................................................................................... 2 E.2.2 Todays Leading-Edge (Flexible and Rigid) BIPV Products ............................. 3 E.3 Technology Driven Competition in the BIPV Roofing Market: An Opportunity for Start-Ups and VCs?.............................................................................................. 4 E.4 The Fragmented Nature of the BIPV Roofing Market and Its Implications ...... 5 E.4.1 Does BIPV Roofing Need New Distribution Channels? ................................... 5 E.4.2 Picking BIPV Roofing Markets by Size ............................................................ 5 E.5 Firms to Watch in the BIPV Roofing Space ....................................................... 6 E.6 Summary of Eight-Year Forecasts of the BIPV Roofing Industry .................... 7Chapter One: Introduction ......................................................................................... 12 1.1 Background to this Report ................................................................................ 12 1.1.1 NanoMarkets Expectations for Future Trends in BIPV Roofing ..................... 12 1.1.2 Technical Challenges to BIPV Roofing Technology ....................................... 13 1.1.3 BIPV Roofing and the PV Industry "Crisis"..................................................... 14 1.2 Goal and Scope of this Report .......................................................................... 16 1.2.1 Definitions of BIPV Roofing............................................................................ 16 1.2.2 Forecasts and Strategies ............................................................................... 16 1.3 Methodology of this Report ............................................................................... 17 1.4 Plan of this Report ............................................................................................. 17Chapter Two: BIPV Roofing Technology and Products: Current and Future......... 19 2.1 The Economics of BIPV Roofing....................................................................... 19 2.1.1 Cost of Roofing Materials .............................................................................. 19 2.1.2 Cost Requirement for BIPV Roofing .............................................................. 19 2.2 Current and Future BIPV Roofing Products ..................................................... 20 2.2.1 BIPV Overlays and Building-Attached PV ...................................................... 21 2.2.2 Other Rigid BIPV Roofing Products ............................................................... 23 2.2.3 Flexible BIPV Roofing Products ..................................................................... 25 2.2.4 Monolithically Integrated BIPV Roofing Products ........................................... 28
  4. 4. 2.3 Impact on BIPV Roofing of PV Absorber Layer Trends ................................... 29 2.3.1 Conventional Silicon Materials in BIPV Roofing Markets ............................... 29 2.3.2 Thin-Film BIPV Roofing: CIGS and CdTe ..................................................... 30 2.3.3 DSC, OPV and BIPV Roofing ........................................................................ 32 2.4 Key Points Made in this Chapter....................................................................... 33 Page | iiChapter Three: BIPV Roofing: Drivers, Challenges and Markets ............................ 36 3.1 The BIPV Roofing Industry: Why Worry? ........................................................ 36 3.1.1 Specialized BIPV Subsidies ........................................................................... 36 3.1.2 Falling Off the Roof: Challenges for the Rooftop BIPV Industry in a World of Low Prices and Lower Subsidies ............................................................................ 37 3.1.3 Will Chinese Suppliers Ultimately Dominate the BIPV Roofing Industry? ....... 38 3.2 The Question of Aesthetics ............................................................................... 39 3.3 Opportunities and Challenges in the Retrofit Market ...................................... 40 3.4 The Role of Builders, Engineers and Architects in the BIPV Roofing Market .................................................................................................................................. 41 3.4.1 Architects....................................................................................................... 41 3.4.2 General Contractors ...................................................................................... 42 3.4.3 Impact on the BIPV Roofing Market of Building Codes and Standards .......... 42 3.5 Key Points Made in this Chapter....................................................................... 44Chapter Four: Eight-Year Forecasts of BIPV Roofing Markets ................................ 47 4.1 Forecasting Methodology and Changes from Last Years Report .................. 47 4.1.1 Changes from NanoMarkets 2011 BIPV Report ............................................ 47 4.1.2 General Forecasting Philosophy .................................................................... 47 4.1.3 Macroeconomic Assumptions and Alternative Scenarios ............................... 47 4.1.4 Pricing Assumptions ...................................................................................... 49 4.1.5 Sources of Information................................................................................... 50 4.2 Eight-Year Forecasts of BIPV Roofing by Type of Products........................... 50 4.2.1 Forecast of BIPV Roofings Share of the BIPV and General PV Market ......... 50 4.2.2 BIPV Roofing by Product Type ...................................................................... 52 4.2.3 Overlays ........................................................................................................ 53 4.2.4 Other Rigid BIPV Roofing Products ............................................................... 56 4.2.5 Flexible BIPV Roofing Products ..................................................................... 56 4.2.6 Monolithically Integrated BIPV Roofing Products ........................................... 60 4.2.7 Summary of BIPV Roofing Products Market by Type of Product .................... 63 4.3 Eight-Year Forecasts of BIPV Roofing by Type of Building ............................ 67 4.3.1 BIPV Roofing in Commercial, Government and Industrial Buildings............... 68
  5. 5. 4.3.2 A Note on BIPV in Single-Family Residential Buildings.................................. 69 4.4 Eight-Year Forecasts of BIPV Roofing by Region ........................................... 69 4.5 BIPV Roofs by Retrofit versus New Construction ........................................... 70 Acronyms and Abbreviations Used In this Report ................................................ 72 Page | iii About the Author ..................................................................................................... 73 List of ExhibitsExhibit E-1: Firms to Watch in the BIPV Roofing Space ................................................. 7Exhibit E-2: Summary of BIPV Products Market .............................................................. 9Exhibit 1-1: BIPV Roofing Market Value Proposition and its Challenges ....................... 13Exhibit 2-1: Cost of BIPV Systems per Square of Roof Area, 10 Percent Module Efficiency ($) .......................................................................................................... 19Exhibit 2-2: Peak Power Producible per Square of Roofing .......................................... 20Exhibit 2-3: BIPV Roofing Overlays Anticipated Roofing Evolution ............................... 23Exhibit 2-4: Flexible BIPV Roofing: Product Types ...................................................... 25Exhibit 2-5: Flexible BIPV Roofing: Products and Addressable Markets ...................... 27Exhibit 2-6: Advantages and Disadvantages of Major PV Absorber Materials for BIPV Roofing .................................................................................................................. 29Exhibit 3-1: Aesthetic Advantages and Disadvantages of BIPV Roofing ....................... 39Exhibit 3-2: Major PV Standards that also Apply to BIPV ............................................... 43Exhibit 3-3: Common Building Requirements for BIPV .................................................. 43Exhibit 4-1: BIPV Roofing: Share of Worldwide PV and BIPV Markets ........................ 51Exhibit 4-2 BIPV Roofing by Type of Product (MW) ....................................................... 52Exhibit 4-3: BIPV Roofing Overlay Market ..................................................................... 54Exhibit 4-4: Rigid BIPV Roofing Market ......................................................................... 57Exhibit 4-5: Flexible BIPV Roofing Market ..................................................................... 59Exhibit 4-6: Monolithically Integrated BIPV Roofing Market .......................................... 61Exhibit 4-7: Summary of BIPV Products Market ............................................................ 64Exhibit 4-8: Market for BIPV Roofing: By PV Technology (MW) .................................... 66Exhibit 4-9: BIPV Roofing Market by Type of Building ($ Millions) ................................. 67Exhibit 4-10: BIPV Roofing Market by Region ($ Millions) .............................................. 69Exhibit 4-11: BIPV Roofing Market by New Construction or Retrofit ($ Millions) ........... 70
  6. 6. Executive SummaryE.1 BIPV Roofing as a Way Out of the PV Industry SlumpAny discussion of the opportunities to be found in the BIPV roofing sector must begin with thecurrent state of the global PV industry of which the BIPV sector is a (small) part. Three trends in Page | 1the PV business define it at the moment. First in terms of sales, the market continues to grow ata fairly rapid rate, but not as fast as in the past. And this is the second trend; the PV boom seemsto be over. The third trend appears at first blush to contradict the first; this is the growing numberof bankruptcies among PV firms. These bankruptcies include not just well publicized start-ups,but some firms that have been in the PV industry for years.A link between these three trends is the sudden rise to power (pun intended) of Chinese PV firms.These firms mostly supply plain vanilla panels at very low prices. Although the point iscontroversial, it is widely accepted that the low pricing of Chinese panels has a lot to do withsubsidies provided for the Chinese PV industry by the Chinese government. This has made ithard for PV firms in the U.S., Europe and Japan to compete effectively, but at the same time thelow panel prices have helped the market to grow. It has discouraged investment in the PVindustry though, and this has certainly been one factor that has helped shut down much of theexcitement surrounding the PV business that has been common for the past two to five years.NanoMarkets believes that the bubble mentality in the PV industry has gone for good and thatthere is no real likelihood of it returning; bubbles burst do not un-burst. However, as shown in ourforecasts, we still believe that PV sales can continue for quite a number of years at a reasonablepace. The focus will therefore be on how money can be made by players in this sector and whowill make that money. This issue must be explored in the context of reduced subsidies for PV bygovernments around the world who are looking for cuts to make at a time of economic crisis.Does BIPV roofing offer a way out of this mess? Can it even provide some opportunities for PVfirms? The answer to both these questions appears to be a tentative "yes." But assuming thatthis is a correct analysis, we think it is a "longer-term yes." Unfortunately BIPV roofing, or BIPV ingeneral does not seem to be a short-term solution to the industrys problems.Proof of this is that several high-profile BIPV roofing firms are in trouble, just like other PV firms.BIPV roofing firms are, of course, just as likely to take false strategic steps as any other firm. Forexample, one of the BIPV roofing firms that is in trouble appears to have adopted a technologystrategy that has served it well for years, but is now obsolete. This kind of misstep is inevitable tosome extent and has little to do with the rather dramatic events that have characterized the PVmarket for the last year or so. E.1.1 The Business Case for BIPV Roofing and the Future of Chinese CompetitionLonger term however, shifting to BIPV appears to be a plausible strategy to be adopted byWestern and Japanese PV firms that have been devastated by Chinese policies and Chinese PVproviders. The BIPV strategy provides a way for PV firms to offer proprietary features andfunctions that customers might pay a premium for and which the plain vanilla panels could notoffer. Also, the economics of integration itself offers a way for firms to spread the cost of both the
  7. 7. building fabric and the PV subsystem over a common fabric, which is a way of countering everdecreasing feed-in-tariffs and other government subsidies.All of the above applies to BIPV in general and not just to BIPV roofing. Other kinds of BIPVinclude BIPV wall siding and BIPV glass. Where BIPV roofing stands out, however, is that it is anatural transition from conventional PV, in that conventional PV panels are most often installed on Page | 2roofs.Assuming that BIPV offers a genuine strategy out of the commoditization of PV panels, the PVfirms that have had it so hard for the last few years may not be completely out of the woods.Much will depend on what the Chinese firms do. If the Chinese PV firms keep up with theircurrent strategy of being very low cost suppliers, then the BIPV route seems very likely to beeffective.But NanoMarkets does not believe that that is what is most likely to happen. Current Chineseindustrial policy suggests that in the very near future, Chinese suppliers will themselves look tocapture more value added. So, more participation in the BIPV roofing industry by Chinesesuppliers is highly likely. If this is accompanied by more subsidies by the Chinese government—as seems likely—then firms employing a BIPV strategy may have simply put off the inevitable.They will be chased into the BIPV business by garden-variety Chinese PV firms, only to be pickedoff by Chinese BIPV firms.NanoMarkets believes that this kind of thing will be inevitable to some extent and it could lead to avibrant BIPV roofing market, but one that is largely supplied by Chinese firms; perhaps includingmany that have not emerged yet. It certainly wouldnt be the first time that an entire industry hadshifted geographies.However, we think the way that this market will ultimately pan out will be more complex.Government subsidies for factories can more or less ensure lower costs and therefore an ability toset lower prices for commodity PV panels. But such subsidies cannot ensure success in marketsthat are driven by non-price factors; they can help to boost R&D, but strong innovation dependson a lot more than money.Thus, in NanoMarkets view, the future structure of the BIPV roofing market, is likely to include alot of new companies, many—but not all—of which may be Chinese. Sadly, as is often the case,many of the BIPV roofing firms that were early into the market may actually disappear. Again, thisis a pattern one can see in many other high-tech markets.E.2 Prospects and Opportunities for BIPV Roofing ProductsNanoMarkets report claims that the total market value for BIPV roofing products will reach $3.9billion by 2016. We see this market as coming from four types of products, each with its ownroadmap for revenue generation. E.2.1 BIPV Roofing OverlaysBIPV roofing overlays are just panels (rigid or flexible) that can be deployed over otherwiseconventional roofs. The integration, such as it is, consists of special fasteners and connectorsthat make it easier to attach the PV panels to the roof. Overlays of this kind may also improve
  8. 8. aesthetics in that they look better than run-of-the-mill PV panels. On flat roofs in flat geographies,however, the aesthetics may not matter all that much.Some observers think the level of integration in BIPV overlays is too primitive to qualify overlaysas BIPV. Instead, they tend to refer to this kind of product as a building-attached PV (BAPV).However, NanoMarkets thinks that the product strategy is similar enough—especially when Page | 3aesthetics is involved—between "BAPV" and "BIPV" to consider them together. However, underour definition overlays account for most of the revenues in the BIPV sector at the present timeand they should be regarded as a mature technology. By 2016, NanoMarkets estimates thatrevenues from BIPV roofing overlays will amount to $1.1 billion.The immediate availability of such products presents a number of opportunities in NanoMarketsconsidered opinion. Overlays, in our opinion, can be effectively marketed to existing buildings asa simple, effective and aesthetically pleasing way of adding PV to both commercial and industrialbuildings. In addition, the relative technological simplicity of overlays suggest that they might be agood way for the traditional roofing industry to get into the PV industry; they enable conventionalroofers to install PV without much knowledge of PV and based on existing skillsets andknowledge. In addition (a fairly minor point in practice) flexible overlays make it easier to installPV on existing roofs without additional physical supports for the roofs.The bottom line here is that NanoMarkets expects the market for todays overlay products (a.k.a.building-attached PV) to grow strongly and they will continue to be a useful part of the product lineof both roofing industry and PV industry product ranges.The problem is that the technology implicit in overlays barely incorporates the economics of BIPV;this being the reason why some people would rather call overlays "BAPV." It therefore seemslikely that overlays will eventually be overtaken in the marketplace by other products incorporatinghigher levels of integration and therefore improved economics. We think, however, there will stillbe some opportunities for overlays, if they are treated as "cash cows" and suppliers are willing tocontinue to offer them at reduced margins and minimal market support. In this context, overlaysmay fit well with markets that are reluctant to take on much technological risk. E.2.2 Todays Leading-Edge (Flexible and Rigid) BIPV ProductsBIPV roofing products—products that can be categorized as embodying "real" integration, butwhich are generally available—consist of tiles and shingles with PV laminates on top of them.The integration here is certainly more thorough than in the mechanical fasteners associated withoverlays. It corresponds to what in the semiconductor industry might be called hybrid integration.These products are not yet sold in large volumes and a few of the suppliers of such products—notably Uni-Solar—have suffered from the economic downturn and the subsequent PV downturn.And this is the segment of the market where NanoMarkets foresees that the most seriousopportunities in the BIPV segment will reside, for the next few years at least. This segment of themarket is new enough and (potentially at least) differentiated enough, for firms to stake andprotect—their claim to the market with novel products. There should also be few worries for thetime being about margin pressures in this product area; unless there is another major worldwiderecession.
  9. 9. All this said, for firms to make real impact in this part of the BIPV roofing sector, they have somechallenges ahead; both technological and marketing challenges:  With regard to technical challenges, manufacturers of BIPV roofing products will have to find ways to match the lifetimes of their products with those of the equivalent conventional roofing products. This is already achievable for lower cost/lower quality shingle products. Page | 4 But harder to do with high-end tile products and for the highest end of the market, BIPV roofing products dont come close to achieving the lifetimes that need to be achieved. This seems to require better encapsulation for BIPV roofing products and NanoMarkets believes that this market gap may even turn out to be a market opportunity for someone.  The other challenge for these leading-edge products is establishing marketing channels. We note, for example, that Dow has grown its distribution network for its solar shingles only slowly. Given Dows huge resources, this would seem to indicate that developing marketing channels for leading-edge BIPV roofing products is not an easy thing to do. One problem that almost certainly has to be dealt with here is finding distributors that are competent in both the PV and roofing industries. Our sense is that this implies the need for a considerable amount of training for suppliers, which is certainly one factor that would slow down the evolution of the BIPV roofing market.E.3 Technology Driven Competition in the BIPV Roofing Market: An Opportunity for Start-Ups and VCs?The development of new forms of encapsulation for BIPV roofing may represent one technology-driven opportunity in the BIPV roofing space, but it is certainly not the only one. In particular,finding ways to more fully integrate PV and roofing functionality is an opportunity that iscompletely open at the present time, both in terms of how this could be done and who will do it.A leap forward in this area, backed with enough money and marketing resources could lead to afirm that ultimately goes IPO and becomes a stock market darling. But this is a highly speculativecomment! At the present time venture capitalists tend to be looking for safer bets and we expectthat if such a firm emerges, it will be with strategic investments from high-profile specialtychemical and electronics firms, and probably both.While there is really no indication as of yet how a monolithically-integrated BIPV roofing productcould be achieved, we can be fairly certain that this will involve a radical shift from todays coreabsorber materials.Of the 160 MW of BIPV roofing products that will ship in 2012, NanoMarkets believes almost 90percent will be accounted for by crystalline silicon (c-Si) PV technology. By 2016, however,NanoMarkets anticipates that this number will fall to around 50 percent. The big winner at theexpense of c-Si will be CIGS, which can be used to make lightweight PV that can be extensivelydeployed on roofs without the need for additional support.CIGS also is a reasonably good material with which to create a higher level of integration for BIPVroofing products. Another such absorber layer technology is dye sensitive cells (DSC), although itcannot come close to the efficiencies achievable by CIGS. What these approaches to PV have incommon in the context of BIPV roofing is that they can (although not without difficulty) be createdusing a coating or printing process. This would—in theory at least—enable the creation of alayered wide area product that could effectively serve as a full integrated BIPV roofing product.
  10. 10. Perhaps this product might also be fabricated in one process at a single plant. Such"monolithically integrated" BIPV roofing panels would offer power producing and roofing fabricfunctionalities that are as melded together as are printing, copying and scanning in an office "all-in-one." NanoMarkets expects such products to be on the market by 2014 or so, although theywill not start to generate significant revenues until a few years after that. Page | 5Along with their cost, and there is a large degree of arbitrariness as to where to draw the linebetween the cost of the PV functionality and that of the roofing functionality.E.4 The Fragmented Nature of the BIPV Roofing Market and Its ImplicationsThe BIPV roofing market—as far as NanoMarkets can tell—is extraordinarily fragmented.NanoMarkets believes that the BIPV roofing market may consist of as many as 300 firmsworldwide, each with its own story to tell and each with its own strategy.In part because BIPV roofing products (other than overlays) are at an early stage of developmentand in part because there are a relative small number of BIPV customers, the line betweenmanufacturer, distributor and installer can sometimes be quite fine.What also makes this market fragmented is that there is a strong geographical focus of thesemarkets. This geographical focus of PV/BIPV markets is being driven to some extent by local orregional subsidies. Some states and regions offer bigger subsidies to BIPV and others less.Obviously, local climate also plays into this issue. E.4.1 Does BIPV Roofing Need New Distribution Channels?Roofing products are expensive to ship and so are PV panels, so this tends to encourage PVfirms and roofing products firms to build factories close to their markets it also provides aframework for the rise of local/regional manufacturers, distributors and (most obviously) installers.But as we have said in other NanoMarkets BIPV reports, we dont actually believe that there is aneed for new distribution channels for BIPV products; it would be quite possible for BIPV productsto flow into the worlds existing distribution channels for building partners. Existing distributorscan easily partner with a second-generation BIPV supplier today, and with minimal changes tologistics, expand their product line.That no new distribution channels may be required does not, however, mean that no newdistribution channels will be created. However, where existing participants in a given regionalmarket are slow to pick up BIPV products, local demand will allow new players to enter the marketand the novelty implicit in BIPV products may lead to exactly this happening.The retrofit roofing market seems particularly open to "new" entrants, although in many cases theplayer is not so much new as less established and so more willing to take risks to grow. Theobvious BIPV roofing product to adopt this strategy with is the overlay. E.4.2 Picking BIPV Roofing Markets by SizeGiven that the BIPV roofing market is (1) highly fragmented and (2) at a relatively early stage ofdevelopment (except perhaps for the overlay segment), many small market niches appear topresent themselves.
  11. 11. Some of these niches will be genuine opportunities and some will be traps. The differencebetween them seems to be that the opportunities seem to have a fighting chance of going intogrowth mode. For example, the now failed SRS Energy seems to have hit a trap. The companymade the choice to target a small, niche application that could not easily grow out of its nichestatus; the U.S. Southwest "mission style" clay roof tile market. Page | 6By contrast, the market for flexible PV roofing is not huge at the present time, but seems to offer anumber of advantages that could eventually take it into growth mode. For example, flexible PVroofing creates something of an opportunity because it can be shipped more easily to a site thancan a rigid, heavy conventional PV/BIPV panel. In certain circumstances, this may enable theelimination of costly nodes in the distribution chain.Light weight may also offer a growth market for flexible displays in the retrofit sector given time.Indeed, the retrofit market itself is another example of a market that has no more than nichestatus at the moment from the perspective of the BIPV roofing market, but with strong indicationsthat well within the forecast period considered in this report, could outgrow its niche status.While new construction activity lags, retrofit and refurbishing work continues. Upgrading a buildingto "Green/LEED" status improves both sale-ability and rental-occupancy rates, and soNanoMarkets expects this activity to outperform the rest of the building industry over the durationof this report. Within the "Green/LEED" building market, second-generation BIPV products shouldoutperform other product categories.Yet another segment that NanoMarkets believes should be of interest to the BIPV roofing marketis outhouses, greenhouses, etc. This is barely even a niche at the present time. However, itmight fit the current capabilities of BIPV roofing quite well. What this market seems to be lookingfor is PV that is easy to install and does not require long lifetimes, so there is thereforeconsiderable hope for growth in this area.E.5 Firms to Watch in the BIPV Roofing SpaceIn most NanoMarkets reports, we include a section called "Firms to Watch," in which we pick fiveto ten firms that seem of special significance in the markets being considered. This report is noexception. However, the criteria being applied to select the firms to watch are somewhat differentthan in other reports.In other NanoMarkets reports, the way that we have chosen the companies that we believed wereworth watching was generally in terms of large market share or in terms of other undoubtedinfluence on the market. For example, when we have considered OLED materials, we havegenerally cited Samsung as a firm to watch, not because it makes OLED materials and has alarge market share in that space, but rather because it is by far the largest OLED display firm andtherefore has considerable influence on what OLED materials firms do.In the case of BIPV roofing companies, however, there are no firms of this kind. Rather, it seemswe should be looking at firms that are iconic in their ability to show up important trends in theindustry. We have provided brief profiles of these in Exhibit E-1.
  12. 12. E.6 Summary of Eight-Year Forecasts of the BIPV Roofing IndustryExhibit E-2 provides current NanoMarkets forecasts for BIPV roofing of all kinds in revenue terms.As this Exhibit shows, the market is dominated by overlay products at the present time, but morehighly integrated products are expected to play a growing role going forward and will quite quicklystart to generate significant revenues. Fully-integrated BIPV roofing products seem further off andare really rather speculative. Page | 7In producing our forecasts, we have made a number of assumptions which are discussed muchmore fully in Chapter Four of this report. Clearly, assumptions about worldwide economicconditions play an important role in our forecasts. All the major developed countries of the worldare still struggling with economic malaise and the forecasts presented in this report assume lowerthat historical economic growth for at least half of the period being forecasted.In general, our assumptions in this forecast reflect what we believe to be a middle-of-the-roadscenario, reflecting modest economic growth in the major nations of the world for the next fewyears. What this means in terms of actual numbers would be perhaps 3 percent GDP growth inthe U.S. and in the 1 to 2 percent growth range for Europe and Japan. China is obviously goingto do better; in the 6 to 9 percent range. We are also assuming that there is some kind ofrecovery in the all-important construction industry worldwide. But as we have noted, there areplenty of other economic scenarios, with some outlier events (e.g., major defaults on sovereigndebt, collapse of European economies) that would not have been taken seriously a few yearsago.Exhibit E-1: Firms to Watch in the BIPV Roofing SpaceFirm Activity in the BIPV Reason to Watch SpaceDow Flexible shingles Company with huge resources and well established in theChemical using Global Solars building materials supply chain. If any firm can succeed in BIPV materials roofing Dow can. Signs that this company is doing especially well in this space would add credibility to the BIPV roofing sector. Signs that it was failing would reduce confidence in the prospects for the sector considerablyFirst Solar No current activity in First Solar is one of the great success stories in the PV space with the BIPV roofing its CdTe panels based on high-volume throughput in its factories. space It has shown no interest so far in the BIPV roofing sector, but if this changes it has the resources to give itself and CdTe a strong share of the BIPV roofing space. It is not the only company that could take CdTe into the BIPV roofing space. GE—which also has connections to the building products industry is also interested in this space and already offers a solar roofing tile product.
  13. 13. Exhibit E-1: Firms to Watch in the BIPV Roofing SpaceFirm Activity in the BIPV Reason to Watch SpaceSoltecture BAPV/overlays This company is interesting, because it has recently changed its focus from being a PV company to being a BIPV company; this is reflected in the name, which is new. Unfortunately the change Page | 8 may have come too late, because Soltecture has filed for bankruptcy and is searching for "partners" to support it. Given this, this companys future and the future of its products are uncertain at best. However, what happens to Soltecture may be a bellwether of (1) how willing investors may be to back BIPV roofing companies and (2) if Soltecture can attract money, the degree to which BIPV can distinguish a firm in the PV marketplace.SunPower Solar tiles Huge PV company, partly owned by Total. While BIPV roofing is a tiny part of this companys business, it will be interesting to see whether over the next two to three years whether BIPV roofing receives more attention as we believe it well might.Suntech Whole roof tile Based in China and the worlds largest supplier of solar panels. Its products actions in BIPV space should be regarded as both a sign of its own strategy and the direction that the Chinese PV firms will take in the BIPV roofing space in the future.Tata Steel/ Steel BIPV roofing This alliance could be as much as two years away from producingDyesol using DSC PV a real commercial product. However, like Dow, Tata is a company with established marketing channels that could quickly take it to prominence. The other interesting factor here is that the nature of DSC suggests that this project could be well on the way to achieving some kind of monolithic integration. On the other hand, Dyesol is having a hard time of it financially at the present time, so there are some issues about how this project may proceed.© 2012 NanoMarkets
  14. 14. Total BIPV Roofing Market 14,000 12,000 Page | 11 10,000$ Millions 8,000 6,000 4,000 2,000 0 2012 2013 2014 2015 2016 2017 2018 2019 © NanoMarkets 2012
  15. 15. Chapter One: Introduction1.1 Background to this ReportBuilding-Integrated Photovoltaics (BIPV) offers both the PV industry and the building productsindustry a way out of their current economic plights: Page | 12  For PV firms, BIPV provides a product strategy geared to adding value to products in a market that is currently being decimated by commoditization  For the building products industry, BIPV roofing represents a new line of products that will enable their construction firms to add saleable features to buildings of all kinds. As such BIPV roofing provides a useful addition to product lines that have been hurt by construction industry downturns worldwide. 1.1.1 NanoMarkets Expectations for Future Trends in BIPV RoofingThe product/market environment currently facing the BIPV roofing industry is profiled in Exhibit 1-1. NanoMarkets expectations are that the challenges listed in this Exhibit will gradually beresolved and that new trends will emerge in the BIPV roofing business:  There is an obvious natural migration path from todays dominant rooftop PV panels to BIPV roofing. As a result, NanoMarkets believes that BIPV roofing is likely to be the fastest growing sector of the BIPV market as BIPV moves from being a premium solution to a more common one  Revenue is already being generated in the BIPV roofing sector to some extent by simple overlay products, but we anticipate that overlays will be quite quickly replaced as a primary source of revenues for BIPV roofing by rigid and flexible BIPV roofing products with a moderate level of integration between the PV layers and the roofing functionality. Overlays will always have a role to play for retrofits.The difficult path to further integration of BIPV roofing products: NanoMarkets also expectsthat the final resting place of the BIPV roofing market—from a commercialization perspective—willbe in some kind of fully-integrated product for which it will be difficult to say definitively whether itis a building product or a PV product; in much the same way that it is hard to say whether anoffice "all-in-one" is a fax, printer, copier or scanner.This fully-integrated BIPV roofing product is still more dream than reality at the present time,although sometimes one already catches a whiff of where BIPV is headed in research devicesand trials. NanoMarkets believes that such a fully-integrated product could capture a significantshare of the revenues from both the roofing and PV industry. But there are major struggles aheadfor the BIPV roofing industry. Some of these are technical and others are marketing related.
  16. 16. Exhibit 1-1: BIPV Roofing Market Value Proposition and its Challenges Value proposition ChallengesRevenue potential Potential for distinctive novel Technology is still immature and products that can tap into huge existing marketing channels are not established markets and marketing familiar with BIPV roofing. channels for both PV panels and Page | 13 roofing materials. Provides new revenue potential at a time when the construction and PV industries face economic challenges.Integration Integration can spread costs of both Path to full integration is not yet clear PV and roofing over a common and absorber materials that seem substrate. Early integrated best for integration are potentially products are already on the market. challenging with regard to lifetimes and encapsulation.Lifetimes Achievable lifetimes are good Lifetimes for BIPV roofing products enough for practical roofing today. are still not at the best that regular roofing products offer. This is a challenge given that BIPV roofing products are premium priced. Encapsulation is again a major part of the challenge here.Competition with BIPV roofing can be sold as At the present time premiums may bestandard roofing premium priced roofing products, very high and decision by buildingproducts adding PV functionality at a owner is complex compared to simply moderate additional cost choosing a simple roofing product.Competition with BIPV roofing can be sold as a PV Although BIPV roofing may offerstandard PV panels panel with improved aesthetics and, improved aggregate value over for those contemplating new buying PV and roofing separately, for roofing, better aggregate those buyers interested primarily in economics. PV functionality, conventional PV panels may be a better buy; especially at the current low price of standard panels.Comparison with other Most conventional panels for On larger industrial and commercialBIPV products individual buildings are placed on buildings, the roof may not be visible, roofs, so a transition to BIPV roofing so no chance to exploit specific BIPV is a natural migration suggesting aesthetics. that BIPV roofing may grow faster than other parts of the BIPV sector in the medium term.© NanoMarkets 2012 1.1.2 Technical Challenges to BIPV Roofing TechnologyThe biggest technical challenge to achieving the fully-integrated BIPV roofing module describedabove is that there is no clear roadmap to how that will be achieved. In part, this seems to bebecause t he absorber materials that appear to offer the clearest road to monolithic integrationseem also to have important limitations that may take a few years to overcome.
  17. 17. The materials that we are thinking about here are CIGS, DSC and OPV, all of which could beprinted/coated as a unique layer in a BIPV roofing product. (It is possible that the samecomments could be made about other absorber materials, except the fabrication techniques forthe trio mentioned above are more developed.) However, CIGS, DSC and OPV all need specialencapsulation for them to be viable as the basis for BIPV roofing. In addition, DSC and OPVtechnologies offer low efficiencies when compared to other more commonly used PV Page | 14technologies.Quite how all these various performance tradeoffs on the way to complete integration will bemade in the long term is far from clear at this point in time.The lifetime issue: The manner in which rooftop PV will shift to full integration can be dismissedby some firms as a futuristic or even an academic issue. However, of immediate importance isthe degree to which rooftop BIPV can withstand the tests of time. To state the obvious, replacingroofs is always costly and never something that building owners and managers want to do often.While achieving long lifetimes in "pure" roofing is a problem that was solved literally millennia ago,engineers have barely begun to solve the problem for BIPV roofing.  As we have already noted (in the context of the need for encapsulation), some of the most promising absorber materials with regard to integration, are also the ones where achieving long lifetimes present the greatest challenges. Much the same thing can be said about substrate materials.  However, early BIPV roofing products should probably be considered no more than good enough from the perspective of the roofing products industry when it comes to the matter of lifetimes. 1.1.3 BIPV Roofing and the PV Industry "Crisis"Much of the analysis above suggests a fairly encouraging future for BIPV roofing. However, aswe go to press with this report, we note that important firms in this space are apparently havingserious problems:  The basic facts behind this trend are that in all of the important markets for solar panels, the market is being flooded with low-cost, Chinese-made solar panels that are undermining suppliers with higher cost structures.  At the same time, the subsidies that have been one of the major factors underpinning the dramatic growth of the solar industry in the past decade are either disappearing or are under threat.These negative trends, of course, are very general and apply across the entire solar industry.However, any premium-priced solar solution—such as BIPV roofing—comes under specialchallenge, because when it is possible to buy solar panels at a very low cost, higher costsolutions stand out and they must do more to prove their business case.Some of the firms in the BIPV business are clearly not equipped to deal with such a crisis, eitherin terms of marketing or in terms of financial resources. This is hardly surprising in that, until a
  18. 18. year or so ago, BIPV firms had no reason to fear a sudden downturn. As a result, NanoMarketsexpects that more BIPV roofing firms will go under in the next year.Nonetheless, NanoMarkets does not believe that BIPV roofing will turn out to be a flash in thepan. Even if the current generation of BIPV roofing companies is decimated by poor economicconditions, there are plenty of other firms ready to jump into the breach. These could potentially Page | 15include firms from the roofing industry as well as firms from the PV industry.More importantly, we expect that some of the specific factors that have hurt the PV industry in therecent past are not likely to persist for long. Of course, much will also depend on the state of theworldwide economy in general and the construction industry in particular.The future of Chinese activity in the PV industry: The consensus is that subsidies by theChinese government to its domestic suppliers in order to build high-volume plants has led to thecollapse in PV prices and to the closing of less "competitive" plants in other parts of the world.The fact that First Solar, a firm that has achieved a low cost structure based on building largecapacities and achieving major economies of scale, could be hurt by an influx of low-cost Chinesepanels, suggests strongly that the impact of Chinese subsidies goes well beyond just supplyingthe Chinese industry with low-cost loans.As such, the Chinese have clearly bought themselves considerable market share and we doubtthat this share is going to drop any time soon. However, what will change, NanoMarkets believes,is the kind of product that the Chinese solar firms will be supplying.The whole focus of Chinese industrial policy these days is changing. Rather than being all aboutproviding moderate quality, "plain vanilla" products at very low cost and for export, the newdirection of Chinese industrial policy is to create much higher value products with domesticmarkets in mind. NanoMarkets believes Chinese solar firms will soon start to develop their ownhigh-value products, which may well mean a direct and important involvement by Chinese solarfirms in the BIPV roofing industry going forward.This might lead to the lessening of the intense price competition that currently exists in the solarindustry, and might also lead to an actual resurgence of high-value solar technologies as Chinesefirms get into the BIPV space and start promoting the activity.However, what such a change of heart by Chinese businesses and government would not meanwould be that the current generation of BIPV firms would be "saved." It might simply mean thatwhen BIPV starts to grow solidly again, the major firms in the industry will be Chinese in origin.Impact of a changing subsidy environment: Another reason for keeping a watch on theChinese solar industry is that China is one of a relatively few countries that has a special subsidyfor BIPV in place, although there are others. Most other geographies do not distinguish betweentypes of solar. Given that Chinese high-tech firms are currently being told to focus on domesticconsumption, this is yet another reason why, in the future, we might expect to see Chinese firmsplay a growing role in the BIPV roofing market.Beyond the unique case of Chinese subsidies, we would anticipate that in other parts of the world,subsidies will begin to fade away. We have already begun to see this happen in Europe and itwould be no surprise to see U.S. subsidies begin to be taken away over the next few years, too.
  19. 19. The immediate motivation for cutting back on solar subsidies would be the growing need in theU.S. and Europe for government cutbacks in general. Reductions in subsidies cannot but helpimpact all solar technologies adversely and we also note that when subsidies are reduced acrossthe board, the absolute price difference between conventional solar and premium solar isincreased. Page | 16On the other hand, the solar industry—including BIPV roofing—was never intended to besubsidized forever. Although the available market for BIPV roofing may contract compared withthe days of subsidies, we have no reason to believe it will disappear completely.1.2 Goal and Scope of this ReportThe objective of this report is to pinpoint the opportunities that are likely to emerge in the BIPVroofing market in the next few years and show how these may be best developed given thechanging market circumstances described above. The potential for technological improvement,which is also described above, is also taken into consideration in this opportunity analysis.Another goal of this report is to examine current and future strategies in the emerging BIPVroofing market. Because of the radically altered strategic situation for BIPV roofing that hasemerged in the past few years, we think that entirely new strategies will be required for firms inthis space. Thus, we have made the required strategic changes for the future BIPV roofing sectora key theme of this report. 1.2.1 Definitions of BIPV RoofingThe scope of this report is a fairly broad; we have included all products that might make areasonable claim to being integrated. This includes simple laminates all the way up to fully-integrated products of the kind we mention above. Definitions are important here. In somearticles and reports about the BIPV sector, it is assumed (sometimes tacitly) that the "I" in BIPVstands for "fully integrated."Under this definition, any BIPV market is made to seem very futuristic, which we think isunfortunate since it leaves out of the equation the considerable amount of effort that has gone intodeveloping the BIPV concept for well over a decade. Indeed, this is especially true of the BIPVroofing segment that has existed (albeit in a primitive form) for almost two decades.The broad approach that we take in this report acknowledges that there is already a substantialmarket around the world that is willing to buy into solar panels that are disguised in roofing insome way. This is important as it illustrates that whole idea of BIPV roofing is not just anothertechnological flash in the pan. We have taken account of the widely varying functionality of earlyBIPV roofing and future fully-integrated BIPV roofing by providing separate discussions andforecasts of different segments of the BIPV roofing market. 1.2.2 Forecasts and StrategiesOur forecasts in this report are provided in both value and volume terms. Volume shipments areforecasted in terms of area covered and MW shipped. This reflects the hybrid nature of the BIPVroofing. It is at once a roofing product (where area covered is the relevant measure) and a solarproduct (where MW is the relevant measure).
  20. 20. Breakouts in the forecasts are provided by type of building, type of BIPV roofing and key materialsused. In addition, we project the nations and regions that will generate the most revenues forBIPV roofing and the breakouts of the BIPV roofing market by retrofit and new construction.In addition, as is usual with NanoMarkets reports of this type, we have included assessments ofthe strategies now being deployed by BIPV roofing firms. In this analysis, we are particularly Page | 17concerned with understanding how BIPV roofing firms plan to cope with the current "crisis" in thePV industry that is described in the first section of this Chapter.1.3 Methodology of this ReportNanoMarkets has now been providing in-depth analysis for the BIPV industry for several years.As part of our ongoing coverage of this sector, we conduct interviews with leading executives inthe BIPV space and these interviews have helped to inform the views expressed in this report. Asnecessary, we have also conducted interviews specifically related to BIPV roofing to meet theadditional needs of this particular report. These newer interviews have focused on theopportunities and challenges in the BIPV roofing market that have already been mentioned.In addition to the information we have collected from these sources, we have also made use ofsecondary research:  Much, but not all of this secondary material has come from the Internet and includes articles from important trade and professional journals, as well as reports from governments and trade/professional associations around the world.  NanoMarkets researchers have also attended trade shows in the U.S., Asia and Europe that have some relevance to the markets considered in this report and have, in part, based our analysis on conversations held with industry insiders, and publications collected at these showsFinally, forecasting methodology is discussed in more detail in Chapter Four of this report. Herewe note that our forecasting model is based on NanoMarkets earlier reports in the BIPV sector,but has been radically updated to take account of todays market circumstances. Also, we haveadded considerable new granularity to these forecasts, reflecting the needs of the BIPV roofingindustry in particular.1.4 Plan of this ReportChapter Two of this report focuses on the products and technologies that make up the BIPVroofing industry. In this Chapter, we examine the various approaches to creating BIPV roofingproducts and how these are likely to change—and be impacted by new technologies in the future.As part of this effort, we have discussed interesting recent efforts by firms in this space to createnew products and technologies.In Chapter Three, we provide an in-depth analysis of the markets into which BIPV roofingproducts will be sold. This includes analysis of the type of buildings in which BIPV roofing isbeing used, as well as the type of roof and geography. The main market drivers and challengesfor BIPV roofing markets—including regulatory influences—are also considered in this Chapter
  21. 21. Finally, in Chapter Four, the report includes a granular forecast of the BIPV roofing market, withbreakouts by MW, area covered and revenues. Page | 18

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