Chinese encapsulant suppliers put incumbents under pressure

Before 2008, encapsulant suppliers from Germany, the U.S., and Japan, such as STR Solar, Mitsui Chemicals, Bridgestone, and Solutia (Etimex), were the dominant companies producing EVA film – taking 60% of the global market share. However, Chinese encapsulant suppliers have steadily increased their market share with players like Hangzhou First PV Material, exceeding Bridgestone and Solutia, to become one of the top three suppliers in 2008.

Chinese encapsulant suppliers have the advantage of proximity to some of the largest module manufacturers in the world, including Suntech, Yingli Green Energy, Trina, Canadian Solar, and LDK. Possibly more important, however, is the price Chinese suppliers are willing to sell EVA: Hangzhou sold their EVA for $2.41/m2 in 2011, between $0.4/m2 and $1/m2 cheaper than EVA made in Europe, Japan, or the U.S.

Historically, module manufacturers have chosen encapsulants based on the lowest cost, rather than performance, as long as modules pass IEC and UL certification tests; as a result, EVA has dominated the encapsulant market. Still, silicones, thermoplastics, and polyolefin encapsulants – primarily supplied by non-Chinese companies – continue to compete with EVA.

Dow Chemical started production of its ENLIGHT polyolefin encapsulant in Thailand in August aiming to replace EVA. Similarly, Wacker Chemie has rolled out a silicone-based thermoplastic film that claims better transparency and faster lamination times at a similar price to incumbent EVA suppliers (i.e., $3/m2 to 3.50/m2).

While encapsulant suppliers with alternatives to EVA claim better performance and/or faster lamination times, success will ultimately come down to cost and how easy it is for module manufacturers to transition from EVA to the new encapsulant. Polyolefins have potential to be less expensive than EVA and Wacker's silicone-based film can increase efficiency – which can reduce the overall cost-per-watt of the module – but capacity needs to ramp up in locations near module manufacturers to compete with Chinese EVA suppliers.