PV equipment backlog becomes an US$8 billion elephant in the room

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

While delivering GW-levels of manufacturing equipment during 2H’11 that is already surplus to market requirements is bad enough, excessive tool backlogs pose yet another worry that needs to be factored into revenue guidance for 2012.

The precise level of backlog cannot be tied down precisely. Even discounting the framework contracts that often do not come to fruition, there is production equipment valued at approximately US$8 billion sitting on supplier’s order books at end September 2011, 40-50% of which is in respect of c-Si and thin film cell/module equipment. The vast majority of this equipment is still being ‘planned’ for shipment in the next 2 to 3 quarters.

Equipment meeting polysilicon plant expansions is in the only low-risk category within this backlog mix. Every other manufacturing segment (c-Si ingot-to-module and all thin-film) presents much higher levels of risk.

During the past 6 months, very few orders have been de-booked– not by lack of efforts from overcommitted manufacturers unable to shift product from existing capacity. PV equipment suppliers have been highly accommodating on delivery dates, thereby keeping orders on the books for now: pre-payments from many customers being the only safeguard in this respect.

In order to contextualize the impact of the backlog revenue figure is to focus on the gating item for value-chain capacity build-out: wafer wire-saws.

Analyzing wire-saw specific PV backlogs at the end of September (taking account of companies like Meyer Burger, Applied Materials and Komatsu-NTC) suggests that tooling capable of producing 10-15 GW of incremental c-Si module production is still awaiting shipment.

It is relatively straightforward to match the backlogs for leading equipment suppliers against the legacy expansion plans of their key customers; but many of these plans are likely about to undergo a significant reset next week when the leading tier 1 c-Si producers in China report Q3’11 results.

CapEx revisions have already been confirmed by First Solar and SunPower, and this has had a direct impact on the equipment suppliers serving these companies’ expansion plans. For equipment suppliers to First Solar and SunPower, these companies represent a dominant part of their PV tool revenues, having developed process-specific equipment.

China tier 1 manufacturers reporting next week are likely to confirm expected austerity measures that will have a direct impact on PV equipment backlogs.

We should expect large revisions to 2012 CapEx figures; shuttering production capacity that is more than 5-years old, not upgrading the lines; focusing even more on cost-reduction and less on some of the high-risk unproven technology changes that were muted as candidates for mass production in 2012.

Ultimately, fiscal year-end will be the best time for equipment suppliers to perform any backlog ‘reset’, thereby starting next year with a backlog figure that is more consistent with subsequent guidance on revenues and margins expected in 2012.

26 January 2022
Join this free webinar for our analysis of the growth of N-Type technology including; new capacity expansions and production output. We'll also be looking at the global manufacturing footprint with forecasts on how much product will be made outside of China this year and which companies are driving technology change across the crystalline silicon value chain.
23 February 2022
Held annually since 2016, the Energy Storage Summit Europe is the place to be for senior stakeholders in the European storage industry. Designed to accelerate deployment of storage, we examine evolving chemistries, business models, project design, revenue stacks and use cases for storage. The 2022 edition will include exclusive content around longer duration solutions, energy strategies for wide-scale deployment of EVs and "EnTech", the event which sits at the intersection of digitisation, decentralisation and decarbonation of the power system. Come to meet TSOs, DSOs, Utilities, Developers, Investors and Lenders and leave with new contacts, partners and a wealth of information.
7 March 2022
Take your chance to join the most powerful platform in the MENA region. Middle East Energy (MEE), Intersolar, and ees, the leading energy exhibitions are joining hands to co-deliver an outstanding renewables and energy storage event at Middle East Energy 2021. Renewables and energy storage at MEE is the largest gathering of solar and renewable energy industry professionals in the Middle East & Africa, offering the most effective trade focused platform to international manufacturers and distributors looking to meet regional buyers.
8 March 2022
As Solar Finance & Investment enters its ninth year, we sit on the cusp of a new power market with solar at its heart. The 2022 edition of the event will build on our years of expertise and relationships to bring investors and lenders together with top developers. Connect with leaders in the field and use exclusive insights to drive investment and development decisions for the future. Meet new and existing project partners at the largest gathering of European solar investors and lenders.
23 March 2022
When it comes to storage, the US market exceeded a gigawatt of advanced energy storage installations (weighted towards lithium ion) at 1.46 GW, more than the previous six years in total! An exponential growth rate could see the market hit 7.5 GW p.a. by 2025. The summit will provide a wealth of content around this vital piece in the US power puzzle, with sessions dedicated to explore how companies are making money from batteries, the latest chemistries and their applications as they apply to different use-cases. We ask how investors can match ESG criteria to batteries and we will bring case studies of successful deployment and project execution onto the stage to examine how you can ensure your own projects are successful.
29 March 2022
Now in its 10th sell-out year, Large Scale Solar returns to Lisbon in 2022. We are excited to gather together face-to-face with the European solar industry as we provide unique and exclusive access to a powerful selection of the market's key stakeholders. Join this elite summit to find out how the market is maturing, which new markets are becoming more exciting, how technology is evolving and who's driving the market forward into the 2020s. Always senior, packed with developers, EPCs, utilities and investors this is the event for companies serious about European solar PV.

Read Next

January 18, 2022
PV inverter specialist Huayu New Energy has upgraded its portfolio of single-module microinverters, launching them in the Brazilian market this month.
January 18, 2022
Trina Solar’s tracker manufacturing unit TrinaTracker has launched a 1P single-row tracker, dubbed Vanguard.
January 18, 2022
Spanish solar company Soltec Power Holdings, through its subsidiary Powertis, has sold a controlling stake in 421MW of its solar PV projects and 90MW of energy storage in Italy to German investment firm Aquila Capital under a co-development agreement.
January 18, 2022
Solar tracker manufacturer Soltec has signed contracts to supply 610MW of its SF7 bifacial trackers to Enel Green Power for use in two PV plants in Peru and Colombia.
January 18, 2022
Prefabricated solar solutions manufacturer 5B is looking to improve the scalability and cost of its technology through an AU$33.4 million (US$24 million) innovation programme and support from the Australian Renewable Energy Agency (ARENA).
January 18, 2022
Hive Hydrogen and Linde plc have teamed up to establish the “world’s largest green ammonia export plant” in Nelson Mandela Bay, South Africa that will have a 780,000 ton/year production capacity.

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
January 26, 2022
Free Webinar
Solar Media Events
February 23, 2022
London, UK
Solar Media Events
March 8, 2022
London, UK
Solar Media Events
March 23, 2022
Austin, Texas, USA
Solar Media Events
March 29, 2022
Lisbon, Portugal