A new market report says that the PV industry’s first “Solar Cycle” has taken place in 2009, with end-market demand shrinking 14% compared to the previous year. DisplaySearch’s “Q4’09 Quarterly PV Cell Capacity Database & Trends Report” states that the contraction was caused by changes in Spain’s incentive policy and was severely aggravated by the worldwide economic crisis and tight credit markets.
The report goes on to note how excess manufacturing capacity has helped push down average PV system prices by more than 25%, but that these lower prices, diversification of the demand base, and positive incentive movement in multiple regions are expected to drive substantially higher demand in 2010.
“Despite the long-term bright outlook for solar, 2009 demonstrated the industry’s cyclicality and that it is still highly dependent on incentives,” said Charles Annis, DisplaySearch’s VP of manufacturing research. “During 2009 there has been nearly 60% oversupply in cell capacity, which means that average fab utilization rates have only been around 40% industrywide.”
“In the first half of 2009, most solar cell manufacturers were under severe pressure and were losing money,” he continued. “However, because the PV industry is so broad-based and diverse, many of the leading producers have already returned to profitability and are running factories at high utilization and moving forward with expansion plans. Demand in 2H09 is proving to be robust and setting the stage for 38% growth next year.”
In 2009, solar cell manufacturing capacity will grow 56% to more than 17GW, according to the report. Cell capacity growth should slow somewhat in 2010-2011, as demand starts catching up to capacity.
Due to the current cell overcapacity, some companies are shuttering older lines and delaying ramp up and new investments, the report notes. For example, Q-Cells is shutting down its first four lines in Germany, as they are not as productive as newer fabs, and adjusting its ramp-up at newer Malaysian lines.
This leaves Q-Cells with 836MW of ramped capacity, pushing them to fourth place in the 2009 capacity ranking, behind First Solar, Suntech, and Sharp, which have cell capacities of 1092MW, 950MW, and 870MW, respectively, the report says.
On the other hand, DisplaySearch notes that many other companies clearly believe in the long-term, high-demand growth scenario and are moving forward with large-scale capacity projects.
Showa Shell Solar is expected to start construction next year on a 900MW CIGS factory in Miyazaki, Japan, while Sharp just reiterated plans to begin ramping its 480MW thin-film line in Sakai by March 2010, producing triple-junction amorphous-silicon thin-film modules at 10% efficiency.
Supply/demand analysis in the Q409 report supports the following outlook: by 2012-2013, PV cell manufacturers will likely need to add more capacity to keep up with forecast demand.
Display Search says that the second edition of the report has been expanded to include a bottoms-up demand database, supply/demand analysis, and a new section covering current events.
Source: DisplaySearch Q4’09 Quarterly PV Cell Capacity Database & Trends Report