PV demand in 2012 below 30GW? A sobering tonic as the industry goes to rehab

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on reddit
Reddit
Share on email
Email

If 2009 to 2011 represented an extended three-year party for the PV industry, then 2012 will definitely be remembered as a long and painful hangover: a year in which forecasts and guidance were rarely achieved, and when being able to report ‘less amount of losses’ quarter on quarter was marketed as a success.

But perhaps missing one specific metric (more than any other) in 2012 could turn out to be a blessing in disguise for the industry. The metric in question here is annual PV demand expectation.

In fact, failure to hit the PV manufacturers’ demand ‘consensus’ from mid-year could actually provide the necessary tonic to sober up the industry. And just to round out the recovery theme, 2013-2014 would then be the rehabilitation phase (operating margin break-even) and 2015 the start of prolonged good health (profit-making).

This article discusses why repeated over performance by the PV industry in surpassing annual PV demand expectations may have been a strong contributor to the mid-year confidence in 2012 exhibited by PV manufacturers. It also looks at how historic trends may have led many to think that excess product manufactured in Q2-3 2012 would somehow find a buyer by year-end, simply because previous years had followed this trend.

Legacy demand consensus a mixture of cautious-optimism and sandbagging

 

Typically, the PV industry started each calendar year with a general ‘consensus’ on annual PV demand. Historically, these levels erred heavily on the side of caution, with PV manufacturers not wishing to over commit as they started to guide full-year shipment and market-share aspirations.

Indeed, the year-start annual forecasts have generally been of more immediate concern to upstream suppliers (especially polysilicon manufacturers) and key materials/consumables suppliers (pastes, backsheets, balance-of-systems components), rather than the individual module manufacturers.

Of course, what transpired over the past few years in the PV industry was that final annual PV demand figures greatly exceeded the industry consensus reached during the first half of each calendar year. And more often than not, the catalyst for this was an eleventh-hour downstream installation frenzy ahead of a 31 December European policy level reset. Often this was largely driven by the creative and collective ability of the downstream channels to galvanise efforts and being able to call upon strong inventory levels that had built up in the second half of each year.

Upside demand bonus for 2012 now considered unlikely

 

By the middle of 2012, most manufacturers had settled on a figure of 30GW when pushed on annual PV demand. In private however, strong confidence did exist then that 2012 would follow trends of the previous years and actual demand levels would end up in the high 30s based on second-half wildcards.

And as such, manufacturing largely proceeded based on business as usual for many, with inventory levels building up along the c-Si value-chain. This factor has simply perpetuated the one thing each of these manufacturers wants to avoid: repeated ASP declines caused simply by product oversupply and competitive sales strategies.

But 2012 demand is somewhat different to previous years. First, most European countries have learned from previous year-end peaks and adjusted policies to curb these effects. And secondly, much of the mid-year optimism was based upon ambitious Q4 2012 demand targets in ‘new’ PV regions where infrastructure and project funding was far from certain.

Final 2012 numbers will not be known and counted for some time yet, and year-end demand spikes cannot be discounted yet across a range of different countries. Furthermore, module inventory is not in short supply either.

But it is becoming more likely that the mid-year optimism is being replaced with the realisation that final year-end demand for 2012 will not follow the trends of previous years and will not provide a welcome upside boost to absorb excess product manufactured.

Figure 1 compares the industry consensus on annual PV demand (at 31 March each year) with the final demand figures that were achieved each year. And figure 2 shows what a 30GW PV industry would look like for 2012, with the top 10 territories itemised in the left-hand-side pie chart.

Sunshine after the rain

The absence of a year-end surge in 2012 should not be considered a bad thing at all for the PV industry. In fact, it may finally provide the wake up call that puts an end to flooding the supply channels with product.

And while nobody would advocate that the PV industry should revert to a ‘made-to-order’ production system, constant oversupply (coupled with a lack of demand elasticity) is only going to prolong a highly competitive selling environment that simply results in ASP declines.

It’s a sobering thought that a downside to demand projections should become a reason for joyous celebration, but the rehab process can only truly start when ASP stability has been achieved. And preventing oversupply is the single most important factor within this recovery process.

28 September 2021
Solar Solutions International is the largest trade show for solar energy in Northwest Europe. Now the solar market has grown up, it's time for the next step. Solar Solutions International displays more than 500 innovations and over 100 practical seminars concerning the latest in energy storage, smart products, and an ever evolving array of solar panels. As an exclusively B2B trade show, Solar Solutions International offers both exhibitors and visitors the chance to network at the highest level. Duurzaam Verwarmd, the largest trade show for sustainable HVAC technology in the Benelux, is held simultaneously. This way your one visit gets you up to date with all of the developments in both sustainable energy and heating.
6 October 2021
Intersolar Europe is the world’s leading exhibition for the solar industry. It takes place as part of The smarter E Europe – the continent’s largest platform for the energy industry. Under the motto “Connecting solar business,” manufacturers, suppliers, distributors, service providers and project planners and developers from around the world meet in Munich every year to discuss the latest developments and trends, explore innovations firsthand and meet potential new customers.
6 October 2021
The future is bright for a new era of US solar and storage, and the 8th annual Solar & Storage Finance Summit will provide opportunities to discuss solutions to the industry’s challenges and provide a networking platform designed to bring together the top minds in the industry to do business. With a mix of high-level, informative presentations and panels, a stellar cast of speakers and audience members with deal-making capacity, the 2021 edition of the event will be a sell-out success.
18 October 2021
Intersolar South America, South America’s largest exhibition and conference for the solar industry, takes place at the Expo Center Norte in São Paulo, Brazil on October 18–20, 2021, and has a focus on the areas of photovoltaics, PV production and solar thermal technologies. At the accompanying Intersolar South America Conference, renowned experts shed light on hot topics in the solar industry.
19 October 2021
This year’s EV World Congress will hold a special role, not only as the first live EverythingEV event in over a year – a chance to renew your connections and re-engage with the EV sector face to face – but also as a chance to share insight and inspiration as world starts to look towards move on post COVID towards hitting ambitious decarbonisation goals in 2030 and beyond. As ever, we will be bringing world leading organisations, cities, and technology providers to the UK to inspire EV innovators, and delve into the challenges facing the sector as the UK looks to revolutionise road transport.
20 October 2021
Utility-scale solar is evolving, shaped by higher power modules and demand for increasingly lower levelised cost of electricity (LCOE). Those trends are also changing project requirements elsewhere, with inverters capable of delivering high power density and power capacity in strong demand. In this webinar, FIMER will detail how its innovative high-power, multi-MPPT string inverter and modular conversion solution can both meet those demands and transform the utility-scale solar sector for the better.

Read Next

September 23, 2021
A project that bids to combine up to 20GW of solar PV with the world’s largest energy storage battery and a 4,200km-long subsea power cable has moved a step forward after Indonesian authorities greenlit its proposed transmission cable route.
September 23, 2021
US national residential and C&I solar plant performance assessment company Omnidian has completed a US$33 million Series B raise.
September 23, 2021
US developer Clearway Energy Group has signed a virtual power purchase agreement (VPPA) with Toyota in North America to supply the company with 80MW of power, accounting for 8% of the company’s regional operations
PV Tech Premium
September 23, 2021
Backed by a new heterojunction module factory in Florida and the expansion of its production plant in Minnesota, solar manufacturer Heliene is looking to take advantage of US policy support to meet increasing demand for American-made PV equipment. Jules Scully discusses the company’s growth plans with CEO Martin Pochtaruk.
September 23, 2021
Arizonan utility Salt River Project (SRP) and renewables company Clēnera have signed a 20-year power purchase agreement (PPA) for the CO Bar Solar project that is expected to deliver between 440-480MW of power
September 23, 2021
Russian wholesale electricity market administrator JSC ATS has allocated 775MW of solar PV in the country’s eighth auction round for largescale renewables, which had an average price of ₽5.18/kWh (US$0.071/kWh)

Subscribe to Newsletter

Upcoming Events

Solar Media Events
October 6, 2021
Solar Media Events
October 19, 2021
BRISTOL, UK
Solar Media Events
December 1, 2021