BIPV Roofing Markets - 2012

NanoMarkets Report
BIPV Roofing Markets – 2012
Nano-543

Published June 2012

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Table of Contents
Executive 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 Today's 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 .................... 7

Chapter 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 ............................................................................................. 17

Chapter 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

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 | ii

Chapter 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....................................................................... 44

Chapter Four: Eight-Year Forecasts of BIPV Roofing Markets ................................ 47
4.1 Forecasting Methodology and Changes from Last Year's 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 Roofing's 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

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 Exhibits

Exhibit E-1: Firms to Watch in the BIPV Roofing Space ................................................. 7
Exhibit E-2: Summary of BIPV Products Market .............................................................. 9
Exhibit 1-1: BIPV Roofing Market Value Proposition and its Challenges ....................... 13
Exhibit 2-1: Cost of BIPV Systems per Square of Roof Area, 10 Percent Module
Efficiency ($) .......................................................................................................... 19
Exhibit 2-2: Peak Power Producible per Square of Roofing .......................................... 20
Exhibit 2-3: BIPV Roofing Overlays Anticipated Roofing Evolution ............................... 23
Exhibit 2-4: Flexible BIPV Roofing: Product Types ...................................................... 25
Exhibit 2-5: Flexible BIPV Roofing: Products and Addressable Markets ...................... 27
Exhibit 2-6: Advantages and Disadvantages of Major PV Absorber Materials for BIPV
Roofing .................................................................................................................. 29
Exhibit 3-1: Aesthetic Advantages and Disadvantages of BIPV Roofing ....................... 39
Exhibit 3-2: Major PV Standards that also Apply to BIPV ............................................... 43
Exhibit 3-3: Common Building Requirements for BIPV .................................................. 43
Exhibit 4-1: BIPV Roofing: Share of Worldwide PV and BIPV Markets ........................ 51
Exhibit 4-2 BIPV Roofing by Type of Product (MW) ....................................................... 52
Exhibit 4-3: BIPV Roofing Overlay Market ..................................................................... 54
Exhibit 4-4: Rigid BIPV Roofing Market ......................................................................... 57
Exhibit 4-5: Flexible BIPV Roofing Market ..................................................................... 59
Exhibit 4-6: Monolithically Integrated BIPV Roofing Market .......................................... 61
Exhibit 4-7: Summary of BIPV Products Market ............................................................ 64
Exhibit 4-8: Market for BIPV Roofing: By PV Technology (MW) .................................... 66
Exhibit 4-9: BIPV Roofing Market by Type of Building ($ Millions) ................................. 67
Exhibit 4-10: BIPV Roofing Market by Region ($ Millions) .............................................. 69
Exhibit 4-11: BIPV Roofing Market by New Construction or Retrofit ($ Millions) ........... 70

Executive Summary

E.1 BIPV Roofing as a Way Out of the PV Industry Slump
Any discussion of the opportunities to be found in the BIPV roofing sector must begin with the
current state of the global PV industry of which the BIPV sector is a (small) part. Three trends in Page | 1
the PV business define it at the moment. First in terms of sales, the market continues to grow at
a fairly rapid rate, but not as fast as in the past. And this is the second trend; the PV boom seems
to be over. The third trend appears at first blush to contradict the first; this is the growing number
of 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 is
controversial, it is widely accepted that the low pricing of Chinese panels has a lot to do with
subsidies provided for the Chinese PV industry by the Chinese government. This has made it
hard for PV firms in the U.S., Europe and Japan to compete effectively, but at the same time the
low panel prices have helped the market to grow. It has discouraged investment in the PV
industry though, and this has certainly been one factor that has helped shut down much of the
excitement 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 that
there is no real likelihood of it returning; bubbles burst do not un-burst. However, as shown in our
forecasts, we still believe that PV sales can continue for quite a number of years at a reasonable
pace. The focus will therefore be on how money can be made by players in this sector and who
will make that money. This issue must be explored in the context of reduced subsidies for PV by
governments 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 PV
firms? The answer to both these questions appears to be a tentative "yes." But assuming that
this is a correct analysis, we think it is a "longer-term yes." Unfortunately BIPV roofing, or BIPV in
general does not seem to be a short-term solution to the industry's 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. For
example, one of the BIPV roofing firms that is in trouble appears to have adopted a technology
strategy that has served it well for years, but is now obsolete. This kind of misstep is inevitable to
some extent and has little to do with the rather dramatic events that have characterized the PV
market for the last year or so.

E.1.1 The Business Case for BIPV Roofing and the Future of Chinese
Competition
Longer term however, shifting to BIPV appears to be a plausible strategy to be adopted by
Western and Japanese PV firms that have been devastated by Chinese policies and Chinese PV
providers. The BIPV strategy provides a way for PV firms to offer proprietary features and
functions that customers might pay a premium for and which the plain vanilla panels could not
offer. Also, the economics of integration itself offers a way for firms to spread the cost of both the

building fabric and the PV subsystem over a common fabric, which is a way of countering ever
decreasing 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 BIPV
include BIPV wall siding and BIPV glass. Where BIPV roofing stands out, however, is that it is a
natural transition from conventional PV, in that conventional PV panels are most often installed on
Page | 2
roofs.

Assuming that BIPV offers a genuine strategy out of the commoditization of PV panels, the PV
firms 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 their
current strategy of being very low cost suppliers, then the BIPV route seems very likely to be
effective.

But NanoMarkets does not believe that that is what is most likely to happen. Current Chinese
industrial policy suggests that in the very near future, Chinese suppliers will themselves look to
capture more value added. So, more participation in the BIPV roofing industry by Chinese
suppliers 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 picked
off by Chinese BIPV firms.

NanoMarkets believes that this kind of thing will be inevitable to some extent and it could lead to a
vibrant BIPV roofing market, but one that is largely supplied by Chinese firms; perhaps including
many that have not emerged yet. It certainly wouldn't be the first time that an entire industry had
shifted 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 to
set lower prices for commodity PV panels. But such subsidies cannot ensure success in markets
that are driven by non-price factors; they can help to boost R&D, but strong innovation depends
on a lot more than money.

Thus, in NanoMarkets view, the future structure of the BIPV roofing market, is likely to include a
lot 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, this
is a pattern one can see in many other high-tech markets.

E.2 Prospects and Opportunities for BIPV Roofing Products
NanoMarkets' report claims that the total market value for BIPV roofing products will reach $3.9
billion by 2016. We see this market as coming from four types of products, each with its own
roadmap for revenue generation.

E.2.1 BIPV Roofing Overlays
BIPV roofing overlays are just panels (rigid or flexible) that can be deployed over otherwise
conventional roofs. The integration, such as it is, consists of special fasteners and connectors
that make it easier to attach the PV panels to the roof. Overlays of this kind may also improve

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 overlays
as 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 | 3
aesthetics is involved—between "BAPV" and "BIPV" to consider them together. However, under
our definition overlays account for most of the revenues in the BIPV sector at the present time
and they should be regarded as a mature technology. By 2016, NanoMarkets estimates that
revenues from BIPV roofing overlays will amount to $1.1 billion.

The immediate availability of such products presents a number of opportunities in NanoMarkets
considered opinion. Overlays, in our opinion, can be effectively marketed to existing buildings as
a simple, effective and aesthetically pleasing way of adding PV to both commercial and industrial
buildings. In addition, the relative technological simplicity of overlays suggest that they might be a
good way for the traditional roofing industry to get into the PV industry; they enable conventional
roofers to install PV without much knowledge of PV and based on existing skillsets and
knowledge. In addition (a fairly minor point in practice) flexible overlays make it easier to install
PV on existing roofs without additional physical supports for the roofs.

The bottom line here is that NanoMarkets expects the market for today's overlay products (a.k.a.
building-attached PV) to grow strongly and they will continue to be a useful part of the product line
of 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 seems
likely that overlays will eventually be overtaken in the marketplace by other products incorporating
higher levels of integration and therefore improved economics. We think, however, there will still
be some opportunities for overlays, if they are treated as "cash cows" and suppliers are willing to
continue to offer them at reduced margins and minimal market support. In this context, overlays
may fit well with markets that are reluctant to take on much technological risk.

E.2.2 Today's Leading-Edge (Flexible and Rigid) BIPV Products
BIPV roofing products—products that can be categorized as embodying "real" integration, but
which 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 with
overlays. 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 serious
opportunities in the BIPV segment will reside, for the next few years at least. This segment of the
market is new enough and (potentially at least) differentiated enough, for firms to stake and
protect—their claim to the market with novel products. There should also be few worries for the
time being about margin pressures in this product area; unless there is another major worldwide
recession.

All this said, for firms to make real impact in this part of the BIPV roofing sector, they have some
challenges 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 don't 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 Dow's 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 is
completely 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 a
firm that ultimately goes IPO and becomes a stock market darling. But this is a highly speculative
comment! At the present time venture capitalists tend to be looking for safer bets and we expect
that if such a firm emerges, it will be with strategic investments from high-profile specialty
chemical and electronics firms, and probably both.

While there is really no indication as of yet how a monolithically-integrated BIPV roofing product
could be achieved, we can be fairly certain that this will involve a radical shift from today's core
absorber materials.

Of the 160 MW of BIPV roofing products that will ship in 2012, NanoMarkets believes almost 90
percent 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 the
expense of c-Si will be CIGS, which can be used to make lightweight PV that can be extensively
deployed 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 BIPV
roofing products. Another such absorber layer technology is dye sensitive cells (DSC), although it
cannot come close to the efficiencies achievable by CIGS. What these approaches to PV have in
common in the context of BIPV roofing is that they can (although not without difficulty) be created
using a coating or printing process. This would—in theory at least—enable the creation of a
layered wide area product that could effectively serve as a full integrated BIPV roofing product.

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 fabric
functionalities 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 they
will not start to generate significant revenues until a few years after that.
Page | 5
Along with their cost, and there is a large degree of arbitrariness as to where to draw the line
between the cost of the PV functionality and that of the roofing functionality.

E.4 The Fragmented Nature of the BIPV Roofing Market and Its Implications
The 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 firms
worldwide, 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 development
and in part because there are a relative small number of BIPV customers, the line between
manufacturer, distributor and installer can sometimes be quite fine.

What also makes this market fragmented is that there is a strong geographical focus of these
markets. This geographical focus of PV/BIPV markets is being driven to some extent by local or
regional 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 PV
firms and roofing products firms to build factories close to their markets it also provides a
framework for the rise of local/regional manufacturers, distributors and (most obviously) installers.

But as we have said in other NanoMarkets BIPV reports, we don't actually believe that there is a
need for new distribution channels for BIPV products; it would be quite possible for BIPV products
to flow into the world's existing distribution channels for building partners. Existing distributors
can easily partner with a second-generation BIPV supplier today, and with minimal changes to
logistics, expand their product line.

That no new distribution channels may be required does not, however, mean that no new
distribution channels will be created. However, where existing participants in a given regional
market are slow to pick up BIPV products, local demand will allow new players to enter the market
and 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 the
player is not so much new as less established and so more willing to take risks to grow. The
obvious BIPV roofing product to adopt this strategy with is the overlay.

E.4.2 Picking BIPV Roofing Markets by Size
Given that the BIPV roofing market is (1) highly fragmented and (2) at a relatively early stage of
development (except perhaps for the overlay segment), many small market niches appear to
present themselves.

Some of these niches will be genuine opportunities and some will be traps. The difference
between them seems to be that the opportunities seem to have a fighting chance of going into
growth mode. For example, the now failed SRS Energy seems to have hit a trap. The company
made the choice to target a small, niche application that could not easily grow out of its niche
status; the U.S. Southwest "mission style" clay roof tile market.
Page | 6
By contrast, the market for flexible PV roofing is not huge at the present time, but seems to offer a
number of advantages that could eventually take it into growth mode. For example, flexible PV
roofing creates something of an opportunity because it can be shipped more easily to a site than
can a rigid, heavy conventional PV/BIPV panel. In certain circumstances, this may enable the
elimination 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 niche
status at the moment from the perspective of the BIPV roofing market, but with strong indications
that 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 building
to "Green/LEED" status improves both sale-ability and rental-occupancy rates, and so
NanoMarkets expects this activity to outperform the rest of the building industry over the duration
of this report. Within the "Green/LEED" building market, second-generation BIPV products should
outperform other product categories.

Yet another segment that NanoMarkets believes should be of interest to the BIPV roofing market
is outhouses, greenhouses, etc. This is barely even a niche at the present time. However, it
might fit the current capabilities of BIPV roofing quite well. What this market seems to be looking
for is PV that is easy to install and does not require long lifetimes, so there is therefore
considerable hope for growth in this area.

E.5 Firms to Watch in the BIPV Roofing Space
In most NanoMarkets reports, we include a section called "Firms to Watch," in which we pick five
to ten firms that seem of special significance in the markets being considered. This report is no
exception. However, the criteria being applied to select the firms to watch are somewhat different
than in other reports.

In other NanoMarkets reports, the way that we have chosen the companies that we believed were
worth watching was generally in terms of large market share or in terms of other undoubted
influence on the market. For example, when we have considered OLED materials, we have
generally cited Samsung as a firm to watch, not because it makes OLED materials and has a
large market share in that space, but rather because it is by far the largest OLED display firm and
therefore 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 seems
we should be looking at firms that are iconic in their ability to show up important trends in the
industry. We have provided brief profiles of these in Exhibit E-1.

E.6 Summary of Eight-Year Forecasts of the BIPV Roofing Industry
Exhibit 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 more
highly integrated products are expected to play a growing role going forward and will quite quickly
start to generate significant revenues. Fully-integrated BIPV roofing products seem further off and
are really rather speculative. Page | 7

In producing our forecasts, we have made a number of assumptions which are discussed much
more fully in Chapter Four of this report. Clearly, assumptions about worldwide economic
conditions play an important role in our forecasts. All the major developed countries of the world
are still struggling with economic malaise and the forecasts presented in this report assume lower
that 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-road
scenario, reflecting modest economic growth in the major nations of the world for the next few
years. What this means in terms of actual numbers would be perhaps 3 percent GDP growth in
the U.S. and in the 1 to 2 percent growth range for Europe and Japan. China is obviously going
to do better; in the 6 to 9 percent range. We are also assuming that there is some kind of
recovery in the all-important construction industry worldwide. But as we have noted, there are
plenty of other economic scenarios, with some outlier events (e.g., major defaults on sovereign
debt, collapse of European economies) that would not have been taken seriously a few years
ago.

Exhibit E-1: Firms to Watch in the BIPV Roofing Space
Firm Activity in the BIPV Reason to Watch
Space
Dow Flexible shingles Company with huge resources and well established in the
Chemical using Global Solar's 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 considerably
First 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.

Exhibit E-1: Firms to Watch in the BIPV Roofing Space
Firm Activity in the BIPV Reason to Watch
Space
Soltecture 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 company's 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 company's 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 world's 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 producing
Dyesol 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

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

Chapter One: Introduction

1.1 Background to this Report
Building-Integrated Photovoltaics (BIPV) offers both the PV industry and the building products
industry 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 Roofing
The 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 be
resolved and that new trends will emerge in the BIPV roofing business:

 There is an obvious natural migration path from today's 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 expects
that the final resting place of the BIPV roofing market—from a commercialization perspective—will
be in some kind of fully-integrated product for which it will be difficult to say definitively whether it
is a building product or a PV product; in much the same way that it is hard to say whether an
office "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 devices
and trials. NanoMarkets believes that such a fully-integrated product could capture a significant
share of the revenues from both the roofing and PV industry. But there are major struggles ahead
for the BIPV roofing industry. Some of these are technical and others are marketing related.

Exhibit 1-1: BIPV Roofing Market Value Proposition and its Challenges
Value proposition Challenges
Revenue 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 be
standard roofing premium priced roofing products, very high and decision by building
products 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 offer
standard 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 commercial
BIPV 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 Technology
The biggest technical challenge to achieving the fully-integrated BIPV roofing module described
above is that there is no clear roadmap to how that will be achieved. In part, this seems to be
because t he absorber materials that appear to offer the clearest road to monolithic integration
seem also to have important limitations that may take a few years to overcome.

The materials that we are thinking about here are CIGS, DSC and OPV, all of which could be
printed/coated as a unique layer in a BIPV roofing product. (It is possible that the same
comments could be made about other absorber materials, except the fabrication techniques for
the trio mentioned above are more developed.) However, CIGS, DSC and OPV all need special
encapsulation for them to be viable as the basis for BIPV roofing. In addition, DSC and OPV
technologies offer low efficiencies when compared to other more commonly used PV Page | 14
technologies.

Quite how all these various performance tradeoffs on the way to complete integration will be
made 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 dismissed
by some firms as a futuristic or even an academic issue. However, of immediate importance is
the degree to which rooftop BIPV can withstand the tests of time. To state the obvious, replacing
roofs 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, as
we go to press with this report, we note that important firms in this space are apparently having
serious 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 special
challenge, because when it is possible to buy solar panels at a very low cost, higher cost
solutions 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, either
in terms of marketing or in terms of financial resources. This is hardly surprising in that, until a

year or so ago, BIPV firms had no reason to fear a sudden downturn. As a result, NanoMarkets
expects 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 the
pan. Even if the current generation of BIPV roofing companies is decimated by poor economic
conditions, there are plenty of other firms ready to jump into the breach. These could potentially
Page | 15
include 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 the
recent past are not likely to persist for long. Of course, much will also depend on the state of the
worldwide economy in general and the construction industry in particular.

The future of Chinese activity in the PV industry: The consensus is that subsidies by the
Chinese government to its domestic suppliers in order to build high-volume plants has led to the
collapse 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 large
capacities and achieving major economies of scale, could be hurt by an influx of low-cost Chinese
panels, suggests strongly that the impact of Chinese subsidies goes well beyond just supplying
the Chinese industry with low-cost loans.

As such, the Chinese have clearly bought themselves considerable market share and we doubt
that 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 about
providing moderate quality, "plain vanilla" products at very low cost and for export, the new
direction of Chinese industrial policy is to create much higher value products with domestic
markets in mind. NanoMarkets believes Chinese solar firms will soon start to develop their own
high-value products, which may well mean a direct and important involvement by Chinese solar
firms in the BIPV roofing industry going forward.

This might lead to the lessening of the intense price competition that currently exists in the solar
industry, and might also lead to an actual resurgence of high-value solar technologies as Chinese
firms get into the BIPV space and start promoting the activity.

However, what such a change of heart by Chinese businesses and government would not mean
would be that the current generation of BIPV firms would be "saved." It might simply mean that
when 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 the
Chinese solar industry is that China is one of a relatively few countries that has a special subsidy
for BIPV in place, although there are others. Most other geographies do not distinguish between
types of solar. Given that Chinese high-tech firms are currently being told to focus on domestic
consumption, this is yet another reason why, in the future, we might expect to see Chinese firms
play 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 it
would be no surprise to see U.S. subsidies begin to be taken away over the next few years, too.

The immediate motivation for cutting back on solar subsidies would be the growing need in the
U.S. and Europe for government cutbacks in general. Reductions in subsidies cannot but help
impact all solar technologies adversely and we also note that when subsidies are reduced across
the board, the absolute price difference between conventional solar and premium solar is
increased.
Page | 16
On the other hand, the solar industry—including BIPV roofing—was never intended to be
subsidized forever. Although the available market for BIPV roofing may contract compared with
the days of subsidies, we have no reason to believe it will disappear completely.

1.2 Goal and Scope of this Report
The objective of this report is to pinpoint the opportunities that are likely to emerge in the BIPV
roofing market in the next few years and show how these may be best developed given the
changing 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 BIPV
roofing market. Because of the radically altered strategic situation for BIPV roofing that has
emerged in the past few years, we think that entirely new strategies will be required for firms in
this space. Thus, we have made the required strategic changes for the future BIPV roofing sector
a key theme of this report.

1.2.1 Definitions of BIPV Roofing
The scope of this report is a fairly broad; we have included all products that might make a
reasonable 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 some
articles and reports about the BIPV sector, it is assumed (sometimes tacitly) that the "I" in BIPV
stands for "fully integrated."

Under this definition, any BIPV market is made to seem very futuristic, which we think is
unfortunate since it leaves out of the equation the considerable amount of effort that has gone into
developing the BIPV concept for well over a decade. Indeed, this is especially true of the BIPV
roofing 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 substantial
market around the world that is willing to buy into solar panels that are disguised in roofing in
some way. This is important as it illustrates that whole idea of BIPV roofing is not just another
technological flash in the pan. We have taken account of the widely varying functionality of early
BIPV roofing and future fully-integrated BIPV roofing by providing separate discussions and
forecasts of different segments of the BIPV roofing market.

1.2.2 Forecasts and Strategies
Our forecasts in this report are provided in both value and volume terms. Volume shipments are
forecasted in terms of area covered and MW shipped. This reflects the hybrid nature of the BIPV
roofing. It is at once a roofing product (where area covered is the relevant measure) and a solar
product (where MW is the relevant measure).

Breakouts in the forecasts 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.

In addition, as is usual with NanoMarkets reports of this type, we have included assessments of
the strategies now being deployed by BIPV roofing firms. In this analysis, we are particularly
Page | 17
concerned with understanding how BIPV roofing firms plan to cope with the current "crisis" in the
PV industry that is described in the first section of this Chapter.

1.3 Methodology of this Report
NanoMarkets 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 in
the BIPV space and these interviews have helped to inform the views expressed in this report. As
necessary, we have also conducted interviews specifically related to BIPV roofing to meet the
additional needs of this particular report. These newer interviews have focused on the
opportunities 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 of
secondary 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 shows

Finally, forecasting methodology is discussed in more detail in Chapter Four of this report. Here
we note that our forecasting model is based on NanoMarkets' earlier reports in the BIPV sector,
but has been radically updated to take account of today's market circumstances. Also, we have
added considerable new granularity to these forecasts, reflecting the needs of the BIPV roofing
industry in particular.

1.4 Plan of this Report
Chapter Two of this report focuses on the products and technologies that make up the BIPV
roofing industry. In this Chapter, we examine the various approaches to creating BIPV roofing
products 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 create
new products and technologies.

In Chapter Three, we provide an in-depth analysis of the markets into which BIPV roofing
products will be sold. This includes analysis of the type of buildings in which BIPV roofing is
being used, as well as the type of roof and geography. The main market drivers and challenges
for BIPV roofing markets—including regulatory influences—are also considered in this Chapter

Finally, in Chapter Four, the report includes a granular forecast of the BIPV roofing market, with
breakouts by MW, area covered and revenues.

Page | 18

BIPV Roofing Markets - 2012

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