As the burgeoning wind and solar power markets continue to expand, industry value chains are looking to adopt measures to sustain anticipated growth. For many component producers, the market growth rate will translate into a need to increase existing capacities, build new plants and spread out to new geographies, according to a new report from Frost & Sullivan.
Markets for certain components will present budding opportunities for new entrants, as growth rates are expected to exceed present manufacturing capacity, according to ‘Overview of the Investment Attractiveness of Selected Parts of the Value Chain: Wind and Solar Power.’
Many European and U.S.-based manufacturers are setting up shop in Asia in order to take advantage of cheaper labor and component prices. Also, with the number of consumers increasing in this region of the world, manufacturers recognize the advantages of placing production locations closer to areas of high demand, according to the report. Both wind turbine and solar module manufacturing facilities have started appearing in countries such as China, Malaysia, Taiwan and the Philippines.
‘While more mature markets – especially in Europe – are starting to reconsider the amount of support they can afford to channel into renewable energy markets, other countries are setting ambitious goals and putting a lot of effort into renewable energy market expansion,’ says Alina Bakhareva, a renewable energy research manager at Frost & Sullivan. ‘This rebalancing of the global renewable energy landscape and hot spots creates a need to diversify into new markets.’
Some components and raw materials require deep technological expertise and extensive production experience in order to produce a competitive product, creating high barriers for new entrants, according to the report. At the same time, there are other markets in which both experience and expertise can be rapidly gained; thus, it is potentially easier for new manufacturers to enter or expand into these parts of value chain.
However, a key restraint that may hinder these progressive attempts is the lack of assurance of government financial support. With national budgets overstretched and an increasingly high level of budget deficit in some countries, funding expended to renewable energy markets in Europe and across the globe may not be reliable.
SOURCE: Frost & Sullivan