June 15, 2016 / agility, best practices, blade selection, industry news, material costs, strategic planning
As we reported in our 2016 Industrial Metal-Cutting Outlook, this year has started off much slower than experts had hoped or anticipated. However, there are still a few industry segments that are sparking demand for industrial metal-cutting companies. One of these segments is solar power.
Over the last few years, the solar power industry has experienced exponential growth. In 2010, solar only totaled 4 percent of all forms of electric generation but has since grown to 30 percent in 2015, according to the latest U.S. Solar Market Insight report from the Solar Energy Industries Association (SEIA).
The sector shows no signs of slowing down either. In the first quarter of 2016 alone, solar accounted for 64 percent of all new electric capacity in the U.S., adding more capacity than natural gas, coal, nuclear, and wind industries combined. SEIA forecasts that the solar industry will nearly quadruple by 2021. In addition, Congress recently extended the Solar Investment Tax Credit (ITC) until the end of 2021, which provides a substantial federal tax credit for both residential and commercial projects until a permanent 10-percent credit takes effect in 2022. The Solar ITC also allows owners who start construction before the end of 2021 to claim a larger credit as long as it’s complete and in service by the end of 2023.
According to an article from IndustryWeek, one of the reasons solar is booming is due to large-scale installations, which will account for approximately 75 percent of all installations this year. The utility and large-scale solar installations require many metal products for towers, including structural tubing, racking, and torque tubes for fixed and tracking systems—all of which have to be cut and shipped.
Industrial metal-cutting companies that want to grow with the solar power market need to be aware of customer needs and how the market is evolving. Based on our research, there are two trends worth noting.
1. Metal Wars
Following suit with other industries, price is driving metal material preferences for solar power installations. According to this article from American Metals Market (AMM), Aaron Faust, vice president of business development and co-founder of Applied Energy Technologies (AET) explained: “During our first four years, we sold predominately stainless products. In the last three years, galvanized steel has taken the lion’s share of our products. For a long time, it was the perfect storm—stainless could complete with aluminum and galvanized. But margin has been squeezed so tight across the board. Prices are driving everything now.”
In addition to price, solar requires high quality and durability to withstand the weight of the installation itself and weather conditions. While aluminum and stainless steel have long been used in solar applications, many aluminum rack suppliers are now offering galvanized steel products, as they not only meet strict specifications for custom utility and large-scale installations but also are highly resistant to corrosion. “Two things that will define next year are the availability of steel and the capacity of companies to process it,” Faust tells AMM. “There’s not much concern over availability, but the market could face some limitations with the market concentrated on certain forms.”
Given a shift in material preference, it is important for metal-cutting companies to have the right tool for the job. For example, carbide band saw blades are designed to cut faster and last longer for a variety of applications, including aluminum and hardened materials like galvanized steel. However, high-performance bi-metal blades may provide a cost-effective solution for carbon steel and structural steel tubing. (For more information on choosing the right blade, check out the Blade Selector tool from the LENOX Institute of Technology.)
2. Fixed vs. Tracking Systems
Besides the preferred metal type for utility grade solar installations, the type of installation itself will have an impact on what industrial metal-cutting companies will be cutting. GameChange Solar, a New York-based manufacturer of commercial and utility scale solar racking and tracker systems, recently switched to pre-galvanized steel for its production after aluminum prices increased, according to an article from Modern Metals. In addition to the material switch, the company recently increased its use of metal tubing and sourced 40 million pounds of sheet and tubing due in part to the growing use of solar trackers. Unlike fixed systems that simply collect sunrays as they pass over the panel, tracking systems follow the sun throughout the day with the use of structural tubing. Panels are then installed on the tube so they can pivot back and forth to increase a panel’s efficiency. GameChange Solar’s President Andrew Worden estimates that the tracker market will total $1 billion this year in the U.S. alone, with the world market growing to an estimated $3 billion.
With nothing but growth in the forecast for the solar power industry, the metal industry is poised to grow alongside it. Industrial metal-cutting companies that stock the right material and cutting tools will be prepared to take full advantage of this market opportunity and gain a competitive edge.