Not withstanding the tumultuous year for solar cell and thin-film manufacturers, the top-10 rankings for 2011 saw only a few changes in position from 12 months ago. Chinese and Taiwanese manufacturers maintained their prominence, securing 8 of the top-10 positions. But the number-one position in 2011 goes to First Solar, the only thin-film manufacturer on the list.
According to new research contained within the latest NPD Solarbuzz PV Equipment Quarterly, the top-10 manufacturers now account for 40% of global production, down four percentage points from one year ago.
While the decline in contribution from the top-10 cell makers may appear at odds with the current shakeout of uncompetitive cell makers, it simply reflects the sheer number of manufacturers that sought to populate the midstream segment during 2011.
Over 350 c-Si cell and thin-film manufacturers began the year with production targets ranging from tens of MWs to over 2GW. Although few of the tier 2 and tier 3 manufacturers came close to meeting their ambitious goals, it was their collective bullishness (33% Y/Y production increase) that would become the catalyst in the oversupply that caused the severe ASP declines during 2011.
Until recently, manufacturers would have been brimming with excitement at the brand value from securing a high ranking. However, with the collapse of market price levels, companies now place greater importance on securing status through cost leadership. This means that rankings based on internal production now carry less impact than each company’s weighted cost structure, conferred by the aggregate of their internal and outsourced production.
However, compiling the ranking of the in-house cell producers (including both c-Si cell and thin-film panel data, normalized to module power ratings) does still provide some leading indicators that can subsequently be used as a health-check on midstream PV manufacturing trends for 2012.
There has already been extensive industry commentary on the highly-visible demise in cell manufacturing across Japan, Europe and North America during 2011. 2012 is likely to be no less challenging for these manufacturers as Chinese and Taiwanese producers continue to leverage their cost leadership in end markets.
Third-party tolling and contract manufacturing was (again) a major feature of 2011 by companies active across the c-Si value-chain. The overcapacity and oversupply environment provided tier 1 vertically-integrated c-Si manufacturers with considerable flexibility to produce cells in-house or utilize tier 2 (or Taiwan-based) cell makers for their own-brand modules. While most tier 1 cell makers had the nameplate capacity to supply all their module requirements during 2011, many took advantage of the very low spot market conditions to outsource up to 30% of the cells needed.
That First Solar heads the pack during 2011 and is the only thin-film manufacturer challenging the leading c-Si cell makers comes as no surprise. First Solar enacted on production to meet its strong in-house project pipeline, setting out a downstream-integrated business model that few others have been able to follow. Going forward though, the challenge for thin-film producers will be how to best compete against the dramatically more competitive, low-cost c-Si value-chain.
The strong demand for high-quality c-Si cells from downstream module producers in China, Japan, Europe and North America has retained Taiwan producers Motech, Gintech, and Neo Solar Power in the top-10 list. Cells produced in Taiwan have increasingly been securing industry-leading brand where manufacturers have been able to successfully combine quality (high-efficiency and high yield) and low-cost. Other Taiwan cell makers Solartech and DelSolar also feature strongly within the top cell rankings for 2011. Collectively, these five Taiwan cell makers produced more than 3.6GW during 2011, with much of this cleared from inventory by year-end.
The anti-dumping case in the US has created an air of uncertainty and confusion around cell-production origin. Contingency plans being drawn up by many of the leading Chinese cell producers for sales into North America are based upon the use of Taiwan-produced cells. Therefore, this is likely to cause at least a short term increase in the share of cell production from Taiwan.
Another highlight is the emergence of Trina Solar. At a time of ‘flight-to-quality’, the success of Trina transitioning from a module-only to a cell-and-module leader is a consequence of the company’s focus on cost structure. Ignoring the temptation to introduce high-risk advanced cell concepts into production, Trina has been thriving on low-cost, standard process-flow cell production lines.
The forecast for 2012 in-house cell production will further extend the trends shown for 2011, with possibly LDK-Solar added as a leading cell producer. However, with no shortage of nameplate capacity shipped to lower tier producers, many still harbour aspirations to gain market-share from the top-ranked companies. Ultimately, it will be the combination of low-cost and high-quality product, together with access to end markets, that will determine who emerges at the top of the list in 2012, during another year where policy adjustments in Europe will temper the industry’s growth rate.