Equipment suppliers serving the PV manufacturing sector are expected to see a new cycle of capital expenditure begin early next year that could reach US$10 billion by 2017, according to NPD Solarbuzz.
The market research firm’s latest PV Equipment Quarterly predicts the freeze in spending by equipment suppliers over the past two years will finally thaw by early 2015 as a rebalancing of supply and demand brings the two-year downturn to an end.
“During 2012 and 2013, solar PV equipment suppliers were confronted by the sharpest downturn ever to hit the sector,” said Finlay Colville, vice president at NPD Solarbuzz. “The decline was caused by strong overcapacity that reshaped the entire PV industry in 2012, which resulted in manufacturers' capital expenditure budgets being put on hold during 2013.”
Solarbuzz said the overcapacity in the sector led to PV equipment spending falling to an eight-year low of US$1.73 billion in 2013, down from US$13 billion in 2011. This means equipment suppliers in 2013 saw bookings of less than US$1 billion.
But Solarbuzz predicts that over the next six months, as PV end-market demand catches up with the 45GW of “effective capacity” within the industry, the two-year downturn will come to an end.
“Thereafter, plans will quickly emerge from PV manufacturers for new capacity additions, which will ultimately drive a strong rebound in revenues available to the equipment supply chain,” Solarbuzz said.
The analyst predicts the new growth phase for equipment manufacturers will be driven primarily by a small number of tier one manufacturers – a reflection of how the recent shakeout has consolidated the supply chain.
Capacity expansions will initially come in increments of 1GW or more, motivated by economies of scale in cost reduction and productivity. “Thereafter, technology-driven spending, historically of minimal upside revenue potential to PV equipment suppliers, will gradually be phased in, as PV cell efficiencies approaching 20 percent become the industry standard,” Solarbuzz said.
Crystalline silicon modules will continue to dominate the market, meaning the new spending cycle due to begin next year will be focused on c-Si technologies. But eventually, thin-film players are expected to grow in influence.
“Strong investments from new thin-film challengers are expected in the coming years, including Hanergy’s plan for several gigawatts of new CIGS capacity within China,” said Colville. “New thin-film capacity is also likely to be built in the Middle East and Latin America, as emerging regions seek to enter the PV manufacturing arena and differentiate themselves from crystalline silicon products made in Asia.”