IHS expects solar industry fallout to peak in 2013: Guides 10 key market issues for 2013

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The highly volatile PV industry is notoriously difficult to predict, yet that has not stopped market research firm IHS in providing its key ten predictions for the industry in 2013.

Starting with its market forecast as the priority pick, IHS said that it expected double-digit installation growth in 2013, which PV Tech estimates would see installations in the mid-30GW range.

However, due to falling prices continuing global industry revenue is expected to continue to fall. The market research firm expects 2013 revenue to be in the range of US$75 million if 2013, down from a forecasted US$77 billion in 2012. According to IHS, industry revenue peaked at US$94 billion in 2011.

Further doom and gloom is expected as the industry ‘solar shakeout’ continues, yet should reach its peak in 2013 as the market research firm expects fewer than 150 companies remaining in the upstream part of the supply chain.

PV Tech has tracked close to 90 companies that have gone bankrupt in 2013, not including those that have closed down operations or exited the sector altogether. IHS noted that in 2010 it tracked 750 companies across the PV supply chain.

The market research firm expects further industry consolidation as many companies exit the sector as they go out of business. Many are expected to have been based in China.

“The photovoltaic industry is in the midst of wrenching change—buffeted by government incentive cuts and nose-diving prices that has hurt solar suppliers worldwide, rocked by trade disputes among its major players, and hamstrung by a sputtering global economy,” said Ash Sharma, director, solar research at IHS. “However, there are some bright spots ahead: Solar installations are on the rise, technology is becoming more efficient, and a weak EU market roiled by financial turmoil will be offset by an ascendant China and the United States.”

According to Sharma, the bright spots include pricing stabilization, emerging markets and continued installation growth in China and the US. However, declining ASPs will also support PV growth in Europe as grid parity approaches and energy storage becomes a new market sector, while investor ROI’s will continue to support larger projects, despite FiT reductions.

Seen as the third important factor in its 2013 predictions, IHS expects mid-2013 to mark the beginning of ASP stabilisation as supply and demand finally rebalances.

The current trade was were cited as the next important issue in 2013, though the market research firm does not believe sanctions will actually do much, not least in the area of massive overcapacity.

Though there is a long list of emerging markets that are not necessarily supported by feed-in tariffs, rising electricity prices while PV continues to fall in costs means that countries such as South Africa and Romania are key markets to watch in 2013.

The sixth prediction is that PV will still offer good returns on European projects as grid parity looms.

2013 is also expected to mark an important milestone in the US as PV is forecasted to surpass wind installations for the first time, a couple of years behind Europe.

China on the other hand will overtake Germany as the leading installer in 2013, expected to install over 6GW.

Also on a positive is the expectation that advanced technologies needed to support cell efficiency increases and support cost per watt reductions will finally breakthrough. However, this did not happen in 2011 or 2012 as PV manufacturers focused attention on production cost reductions. Implicit in IHS’ forecast is that ASP stability in the second-half of next year could then lead to a technology buy-cycle.

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