Two years of turbulence in terms of supply and capacity are leading to calmer days ahead, according to NPD Solarbuzz’s latest Quarterly Report. Demand across the world’s markets will surpass 30GW this year, signifying an 8% increase year-on-year. Over 5GW of this global demand will be from the emerging Asia-Pacific regions, with China’s domestic market growth representing a large proportion of this 5GW figure.
Factors that have been affecting supply and demand across the industry will stabilize somewhat in the second half of this year, says the market research firm. Module production costs will drop, driven by silicon and non-silicon processing costs that will see a decline of between 20 and 35% during 2012. With polysilicon ASPs expected to decline by less than 10% in the second half of the year, c-Si manufacturers have a decision to make – the only way to remain competitive is to prioritize their non-silicon cost-reduction processes.
Michael Barker, Analyst at NPD Solarbuzz, says, “The PV industry has been suffering from a significant imbalance between supply and demand for over 18 months, causing severe price erosion and reducing corporate margins. However, confidence in strong market demand during 2H’12, together with prudent capacity utilization, will provide PV market leaders with increased visibility ahead of 2013 strategic planning.”
Major cost reductions can be implemented at the module production stage, with some Chinese c-Si manufacturers having the capability to reduce their module costs by over 40% during 2012, and even further reductions possible next year.
Many of the major Chinese players are putting measures in place to accommodate high demand towards the end of this year – possibly as much as 30% above the predicted 30GW mark. This optimism – not unfounded, says NPD Solarbuzz – has been brought about by experience in an industry that has seen a pattern of year-end surges coupled with greater opportunity given the increase in emerging markets
Nevertheless, c-Si module ASPs will continue to plummet with further drops of between 25 and 45% possible before the year is out. So while the balance will indeed be restored to an extent in terms of supply and demand constraints, manufacturing cost reduction will be the name of the game for those manufacturers interested in continuing to conduct successful business in 2013 and beyond.