Market Intelligence

Green & Sustainable Construction

Building Integrated Photovoltaics (BIPV)

The solar PV market has seen considerable growth in the past few years, most recently with a record production of approximately 2500 MW of cell production in 2006, and tremendous excitement in the investment community with a number of successful IPOs and increased venture funding. The ultimate prize that solar PV seeks, however, is cost-per-watt parity with the electric utility grid. A tremendous amount of energy has been directed towards this objective by the industry with promises of cost reductions from economies of scale, improved efficiencies and pervasive applications. One application that has recently seen a lot of press is building integrated photovoltaics (BIPV). From a number of high profile architectural designs to its allegedly impending ubiquity in the design, construction and sales channels for creating buildings, BIPV has been positioned as a leading force for the solar PV market.

The largest installations for solar PV have been on-site, i.e located on or next to the buildings that consume the generated power. BIPV has garnered considerable attention with its promise to bring an era of pervasive solar PV that is aesthetically pleasing, cost effective and a mainstream building powering technology. The benefits it offers to architects and homebuilders include:

  • Greater flexibility to architects as a new tool offering both aesthetic and functional value
  • Functional value beyond power generation; for example shading and visual glass applications
  • Lower costs from a designed-in approach to solar PV
  • Mortgage-based financing opportunities

Roof-integrated PV, for instance, has become more popular as homebuilders and solar consultants have increased their experience with solar PV and better understand its challenges. Solar PV is complex and involves different expertise from standard solar, such as solar system designers, building contractors and electricians. These professionals must deal with myriad of issues such as placement and orientation of panels for optimal light and maintenance, matching electrical characteristics of panels and inverters, preserving the integrity of mounting structures such as roofs, etc. Roof-integrated PV addresses many such concerns by combining roof and PV elements together. It is no surprise that solar PV vendors are fervently working on improving and introducing products, long-established building industry vendors are entering the solar business, and roofing contractors are taking over the installation and maintenance of solar PV systems. The building market is large (in 2006, 1.8 million privately-owned housing units starts in the US alone) and the business opportunities abound. With so many buildings going up and the intense attention on solar, the BIPV market is poised to rocket.

Or is it? At Greentech Media, we decided to take a closer look and seek some clarity around the din of BIPV. Building Integrated Photovoltaics: Market Outlook 2008 and Beyond assesses BIPV’s impact on the solar market, along with the race for dominance that is taking place in this potentially huge market.

The report examines the building integration application in detail covering the requirements specific to BIPV within the framework of solar PV in general. In structuring and classifying the BIPV market, we emphasize the significance of the roof-integration application. We take a close look at various problems that must be solved by BIPV and the challenges faced in doing so. We examine the various factors that can and will impact the market, including regulatory policies and the market’s sensitivity to pricing. We compare the advantages of crystalline silicon and thin film technologies in addressing the market. In realizing the potential opportunities, many established and new PV vendors, roofing contractors, consultants and construction element vendors are entering the market. But solar PV’s tremendous sensitivity to price and the cross-functional nature of BIPV are the two dominant factors that will temper any potentially explosive growth of this application in the short-term. Establishing effective sales channels in an age-old construction industry takes a long time and the pressure on pricing in the building market is multi-faceted.

Despite these factors, we are bullish on this business, especially considering the inevitable ubiquity of solar power in buildings. Buildings will increase their value by playing larger roles in a distributed energy generation infrastructure while retaining, and most likely growing in an increasingly crowded world, their predominant societal attributes of architecture and aesthetics. BIPV will permeate the construction sales channels, construction workers will become familiar with the product and issues of maintenance will be ironed out. But from our point of view, factors driving BIPV’s mass-scale adoption will be addressed gradually, drawing out the growth of BIPV over time.

Key Findings

BIPV will break out as mainstream when aesthetics no longer command a premium over competitive pricing or when PV reaches grid parity
The current PV market is extremely sensitive to pricing because of its dependence on incentives and has only marginal sensitivity to aesthetics. BIPV is a niche market because only a small fraction of PV consumers are willing to pay the aesthetics premium over market price currently set by conventional PV. Until solar PV reaches grid-parity (at which point market differentiation will become more important) BIPV’s rise to prominence will be determined squarely by when thin film technology with its efficiency and BIPV’s aesthetic premium becomes cost-competitive with crystalline silicon-based conventional PV.

Large crystalline silicon manufacturers have a significant advantage
Established solar PV manufacturers hold an advantage in expertise, established products and existing business relationships over new entrants. Unless the premium commanded by aesthetics for crystalline silicon products drops to acceptable levels or thin film can compete effectively on total cost of ownership, conventional PV will enjoy the market penetration advantages of the incumbents. There is little indication of the former being pursued aggressively.

Thin film has yet to prove it has overcome price-efficiency trade-offs
Thin film offers lower cost but also lower efficiencies; and as it pursues the processes to produce volume-based price reductions it may yet lose the race to poly-silicon that has established sales channels and is already enjoying volume sales.

Establishing successful sales channels to open up the market is a time-consuming effort
Penetrating a long-established building industry supply chain is a time-consuming process that involves educating the building industry on technology and instituting changes in currently adopted practices, and is impacted heavily by evolving regulations.

The largest component by far of the BIPV market is roof-integrated PV
Although the BIPV market also consists of fenestration and façade products, the roof-integrated PV market dwarfs the others. The fenestration and façade applications are driven by aesthetics and marketing demands by customers that are willing to pay the high premiums associated with the products.

The roof PV market is pre-dominantly driven by price
Due to PV’s dependence on incentives, the roof PV market is extremely sensitive to price and consequently results in a relatively small aesthetics-driven roof-integration market for BIPV. Furthermore the aesthetics driver primarily applies to sloped-roofs. Flat-roof applications are increasingly insensitive to aesthetics especially with the introduction of new, competitively priced compact products; as a result this market is primarily driven by price.

Integrated roof PV shingles offer tremendous potential
Shingled roofs form about 80% of US roofs (primarily in states other than in the southwest, which states are yet to stimulate solar PV on a large scale) and a large percentage of roofs in Europe; currently only a single manufacturer serves this market.

Among the challenges facing BIPV, social issues are important
BIPV brings together two historically separated trades – construction and electrical. Overcoming the friction that arises from such convergence is critical to growing the market at a healthy pace.

The most important product issue for BIPV is maintainability
Once the challenges of cost and aesthetics are overcome, maintenance is the single largest issue for BIPV; automating failure detection and ease of maintenance procedures are of paramount importance to building owners and operators.

BIPV Market Growth

The PV market at present is, by far, the most sensitive to product pricing. Some consumers are willing to pay the aesthetic premium for BIPV but by and large this segment has been small with suppliers commanding higher prices. Commercial volume homebuilders are sensitive to solar PV costs as it impacts home pricing and incurs management costs stemming from incentive recovery and paperwork that frequently continues even after a home has exited inventory. Solar PPA providers, suppliers for the majority of commercial installations, have a business model that essentially delivers cheap capital for solar and is therefore painfully sensitive to capital costs; consequently solar PPA providerss intensely seek cost efficiencies across the board.

For BIPV to become mainstream, its economics must match those of conventional PV. Higher prices for BIPV have traditionally been a result of the cost of production: custom-built products and the inherent disadvantage of a lack of scale – smaller roof tiles modules are not as cost effective as larger solar modules even when factoring in the avoided Balance of System costs. BIPV must not only match the price reductions of conventional PV but also surpass them to gain broader market acceptability. This will be a challenging task as conventional PV is currently enjoying unprecedented growth with the solar industry entering a period of supply-side maturation.

The real catalyst for the BIPV market will be the improvement of the cost-efficiency ratio of thin film PV. As thin film achieves commercial scale production and higher operational conversion efficiencies, it will drive down the cost of thin-film based BIPV products. When thin-film BIPV becomes cheaper than crystalline silicon BIPV, we expect the BIPV market to see considerable growth.

BIPV’s rise to mainstream is heavily dependent on the outcome of the cost reduction race between crystalline silicon and thin film technologies. 2007 has been a key year for thin film. There has been considerable excitement about and investment in CIGS, notably Heliovolt, Miasole and Nanosolar, with a quadrupling of production forecast for 2008. First Solar has had an excellent year with large orders booked and proving a successful business model for Cadmium Telluride. However Cadmium Telluride has yet to see penetration beyond solar field deployments because of lack of popular support due to concerns, widely considered misplaced, about Cadmium toxicity and con-version efficiencies. Furthermore long-term Cadmium feedstock concerns have not played in its favor. Of course, once solar PV reaches grid-parity and is no longer pre-dominantly price-sensitive, product differentiation will naturally drive BIPV and we will see wide scale adoption of PV in many more construction elements.



This article is an abstract of the report Building Integrated Photovoltaics (BIPV): Market Outlook 2008 and Beyond published by Greentech Media and can be purchased through their website.


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Posted by michael-lee
01/25/2008
that's very good for the newcomers
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