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GTM Research released its latest PV report today, “PV Technology, Production and Cost Outlook: 2012-2016,” which has the company predicting that 21GW of PV module manufacturing capacity will come offline by 2015 due to the global market resolving its supply/demand imbalance.
The report estimates that this year alone, module supply will be in excess of global demand by almost 110% (or around 59GW) of total supply compared to 30GW of total demand. Furthermore, GTM expects wafer, cell and module manufacturers to withdraw a combined 60GW of capacity by 2015.
“The PV manufacturing industry has evolved from a period of secular growth, in which profits grew year-over-year, to a period of cyclical growth” said Shyam Mehta, senior analyst at GTM Research and the report’s author. “Fundamentally, this is due to the sheer magnitude of overcapacity that exists in the value chain today and the speed with which feed-in tariffs are being extinguished the world over. We are in a transitional time in the history of the market; the training wheels of subsidies are coming off, and the next few years will see the industry’s first attempt to ride without support. Consequently, the next three years will be an extremely difficult period.”
Mehta additionally mentioned that most module suppliers should not expect to reach financial success by selling commoditized “plain-vanilla” modules simply due to the future outlook of the level of overcapacity and resulting compressed pricing. He noted that only a select few low-cost, top tier firms such as Yingli Green Energy and Trina Solar can attain manufacturing costs of US$0.45 per watt by 2015 and sustain profitability.
“Most current PV manufacturers will have to take a long, hard look in the mirror and make tough decisions about their future role in the industry,” said Mehta. “They can either exit gracefully, or continue as producers in the undifferentiated component market where they have no inherent advantage, or take risks in terms of their business, technology and product models, knowing full well these moves could also end in failure.”