The PV module market should return to profitability in the third quarter of 2013, according to a new report from market researchers IHS iSuppli.
Revenues of the module industry that dropped throughout 2012 are predicted to bottom out in the first quarter of next year. From then on a recovery is expected.
The industry will return to growth only by the second quarter next year, finally regaining lost ground by the fourth quarter when revenue springs back to an estimated US$7.06 billion in that quarter. This is still significantly less than in the boom year of 2010, when quarterly module revenues exceeded US$10 billion in Q3 and Q4. Nevertheless it marks the reversal of a trend that will help the most competitive suppliers to noticeably increase their profitability in the second half of 2013, with the overall value for 2013 likely to be in the region of US$25 billion, IHS said.
Global revenue for the solar module industry, comprising both crystalline and thin-film modules, fell for the first time this year during the third quarter to US$6.63 billion, down 7% from US$7.14 billion in the second quarter. Prior to the decline, revenue had been up 2% in the second quarter from US$7.03 billion in the first quarter.
An installation surge in June helped to temporarily slow down PV cell and module price declines, driven by high demand in Germany. Developers rushed to connect systems by 30 June in order to qualify for the country’s feed-in tariffs before the rates expired. Distributors were able to capitalise on strong demand, giving rise to higher pricing in the run up to the deadline.
As a result, global installations at that time reached 8.2GW, up 68% from 4.9GW during the same period a year ago.
The market is projected to retreat further for a second time this year during the fourth quarter to US$6.62 billion, with revenue continuing to decrease throughout the first half of 2013. The IHS report expects market pricing for crystalline modules to decline by another 9%, falling to US$0.64 per watt at the end of 2012, down from US$0.70 at the end of September.
Demand from Europe and the Asian markets – predominantly China – cooled during the third quarter, with prices coming under strong pressure again, particularly in August. In the process, the entire photovoltaic module value chain suffered in the third quarter: wafer prices dipped 11%, module prices fell 14% and both cell and polysilicon prices plunged 17%.
Stefan de Haan, principal analyst at IHS, said: .“After flattening in the third quarter, global installations are forecast to grow slightly in the fourth quarter to 8.7GW, bringing the annual total to more than 31GW, up 11% from 28GW in 2011. Even so, IHS does not consider the uptick in demand to be strong enough to prevent further price drops toward the end of the year,” commented Stefan de Haan, principal analyst at IHS.
In addition to persistent overcapacity present in the industry since early 2011, IHS believes two major trends will drive global prices further down.
“First, demand in the fourth quarter will be fueled by installations in China. But while many delayed solar projects in the country will be implemented during the remainder of the year and help improve global installation figures, China is a low-priced market. As a result, even a strong fourth quarter in China won’t induce a recovery in prices,” added de Haan.
“Second, Chinese manufacturers are already reducing module shipments to Europe, in response to a European Commission investigation on anti-dumping charges of crystalline modules, cells and wafers originating from China. In exchange for the voluntary reduction of shipments from China, European wholesalers will aim to reduce their dependency on Chinese suppliers in the coming months and balance their portfolio,” concluded de Haan.
Although IHS does not expect any duties to be implemented in Europe – unlike the US case where similar charges against China have been leveled – uncertainty is expected to arise in the market until final findings are published in December 2013. These developments are likely to increase pricing pressure on Chinese suppliers in Europe.
Installations are expected to grow 10% on an annual basis, with Asian markets – particularly China and Japan – compensating for declining demand from Europe. With capacity expansion finally coming to an end, operational module manufacturing capacity is forecast to reach 51.9GW in 2013.
IHS is expecting overall global installation markets to pick up again after the first six months of 2013 and then continue to improve over the course of the year. Meanwhile, overcapacity that had built up because of massive investments in 2010 and 2011 will have less dramatic repercussions in 2013 than during this year.
In conclusion, the IHS report said the decline in PV module prices afflicting the market will slow down in 2013 and then eventually stop by the second half of the year. By the fourth quarter of 2013, average crystalline module prices are forecast to reach US$0.55 per watt, down 14% from the same time in 2012, compared to a bigger contraction of 32% between the fourth quarter of 2011 to 2012.
Overcapacity, a decline in pricing, as well as slowing growth in key worldwide markets will serve to keep the global PV market for solar modules depressed for the rest of the year, with recovery not expected until well into the second half of 2013.