Massive solar module overcapacity to remain a problem until 2012, says iSuppli

Facebook
Twitter
LinkedIn
Reddit
Email

Henning Wicht, iSuppli’s senior director and principal analyst for photovoltaics market research, has become increasingly bearish on the photovoltaics industry due to the severe overcapacity throughout the supply chain. In a new report, Wicht projects that PV module production–which is still expanding–will reach a capacity of 7.5GW in 2009, however installations will only reach 3.9GW. This means that nearly half of all solar panels produced in 2009 will remain unsold and a massive inventory build will persist until 2012.

“The solar industry in 2009 has been undermined by collapse in demand due to the decision by Spain—which accounted for 50% of worldwide installations in 2008—to change its feed-in-tariff policies,” noted Wicht. “This demand drop led to a massive buildup of inventory throughout the supply chain, from the raw material polysilicon, to photovoltaic cells, to complete solar systems. Despite this, solar panel makers have continued to increase capacity and production, exacerbating the inventory build-up.”

This article requires Premium SubscriptionBasic (FREE) Subscription

Unlock unlimited access for 12 whole months of distinctive global analysis

Photovoltaics International is now included.

  • Regular insight and analysis of the industry’s biggest developments
  • In-depth interviews with the industry’s leading figures
  • Unlimited digital access to the PV Tech Power journal catalogue
  • Unlimited digital access to the Photovoltaics International journal catalogue
  • Access to more than 1,000 technical papers
  • Discounts on Solar Media’s portfolio of events, in-person and virtual

Or continue reading this article for free

Module price declines have been more severe in the first half of the year than many PV manufacturers and observers had predicted. Many expected a decline in prices of between 10 and 15%, due to FiT changes in Germany and as a result of polysilicon price declines as overcapacity became apparent in the second half of 2008. Module prices could yet decline 25% for the year, should the inventory build continue, putting further pressure on pricing.

The long harsh winter in Europe and continued limited availability of credit to fund large-scale solar projects have further contributed to a period of weaker-than-expected demand in the major markets for solar. With the collapse of the Spanish market last year, coupled to the U.S. market growth not expected until 2010, the PV market is expected to decline in 2009.

Such is the level of overcapacity that Wicht does not expect the inventory to return to normal conditions until 2012. This will be helped by an eventual slowdown in PV module expansion plans. iSuppli’s updated forecast shows supplier production flattening for the years from 2011 through 2013, compared to its previous forecast.

The biggest change in production projections is in 2009. iSuppli previously projected production would reach 11GW, however, the cutbacks will see production reach only 7.5GW. Even so, this being forecasted shows a significant gap between supply and actual demand. 

“Even in the face of the downturn, many panel and cell producers have continued to ramp up their capacities as if a recession had never occurred,” Wicht said. “Most companies are doing this in order to maintain their share in the market.”

The continued production expansion plans would seem to be primarily coming from Chinese-based producers. iSuppli said that they expect Suntech to become the number-one producer of crystalline cells in 2009, overtaking Q-Cells, which has reduced production plans because of the weak market conditions.

Read Next

February 14, 2025
Renewables developer Invenergy has begun commercial operations at a 300MW solar PV plant in the US state of Texas.
February 14, 2025
Nozomi Energy has appointed Shizen Operations, a subsidiary of the Shizen Energy Group, to manage a 312MW solar portfolio in Japan.
Premium
February 14, 2025
“As the market develops, there’s more sophisticated views of the market,” said Aldevinas Burokas at Solar Finance & Investment Europe 2025.
Premium
February 14, 2025
Several distributors told PV Tech that they received messages from suppliers that some PV module manufacturers are considering increasing prices.
February 14, 2025
Brite Solar has commissioned a 150MW transparent module manufacturing plant in Greece that will produce modules for the agriPV sector.
February 14, 2025
Environmental Law & Policy Center argued that PJM’s scoring system would favour specific resource classes, such as combined cycle gas.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
February 17, 2025
London, UK
Solar Media Events
February 19, 2025
Tokyo, Japan
Solar Media Events
March 11, 2025
Frankfurt, Germany