Have you been confused by the current “sold-out” situation for PV manufacturers and then see reports stating that factory utilization levels averaged 50% or 60%? Finlay Colville, senior analyst at Solarbuzz, explains in this guest blog that a more accurate way of reporting utilization rates among PV module manufacturers is required, one that better matches real-world utilization rates.
Stimulated by soaring downstream demand through 2010, capacity conversion (and utilization) within leading PV manufacturers’ fabs will approach 90% this year. Described within analysis contained in Solarbuzz’s new PV Equipment Quarterly report released Oct. 11, capacity conversion (annual production divided by annualized quarterly ramped manufacturing capacity) is explained by segmenting PV fabs into tier categories and comparing their relative performance. While providing a convenient visual tool to assess utilization trends, tier categorization is essential to understand materials demand, equipment forecasts, and technology trend roadmaps within the industry.
Today, there are over 420 PV fabs worldwide spread across almost 300 different c-Si cell and thin-film panel manufacturers. These fabs range from pilot-line or R&D plants, to legacy (underutilized) MW-size lines installed 10 years ago, to state-of-the-art 100MW+ fabs running flat-out in three-shift operation. Spurious conclusions are all too often reached by analysing these fabs and manufacturers collectively. Indeed, when factoring in the variety of absorber types, supply chains, panel sizes, and R2R designs, the range of process flows alone employed within these fabs easily exceeds fifty.
Utilization is one of the generic terms that often gets caught up in this trap. For example, it is not uncommon for observers to estimate fab production globally and just divide this number by the collective year-end nameplate capacities of all 420+ fabs, yielding a ‘nameplate’ capacity conversion figure–loosely defined as utilization–of just 52% for 2010: a misleading calculation which clearly masks the true picture painted by PV manufacturing today, and certainly causes confusion among cell manufacturers and tool/material suppliers.
Solarbuzz's analysis–which segments every PV fab into one of several tier categories depending on its technical and commercial status–provides differentiation here, illustrated by the accompanying figure. Applied to manufacturing capacity conversion (and utilization), the true landscape is revealed by reviewing manufacturing capacity conversion for the main tier categories and comparing them directly to the top-10 producers each year and to the PV industry as a whole (all 420+ fabs).
Tier categorization is further validated when considering that tier 1 manufacturers will account for almost 75% of global cell and thin-film panel production and for over 60% of all annualized manufacturing capacity available during 2010. The top-10 producers for 2010 will approach annualized ramped manufacturing capacity conversion rates of 90% for the first time.
There are several reasons why rates even for the top-10 do not reach 100% this year, contrary to the misconception that ‘sold-out’ automatically means ‘maximum utilization’: 2010 has seen significant capacity expansion across leading manufacturers, and there is always a finite period for newly installed lines to reach high yield; many of the fabs in operation today are 5+ years old and still have bottleneck issues at various process stages along the production lines; high-efficiency upgrades have been implemented with partial success across a number of existing lines and this generally provides throughput and yield challenges to overcome during new process optimization; and finally, raw material availability is always lurking in the background in the form of wafer supply.
Looking forward to 2011, while tool upgrades will help to debottleneck lower yield lines, and high-efficiency variants are being retrofitted (including selective-emitter cell concepts), end-market demand will ultimately be the gating factor in determining manufacturing capacity conversion (and utilization) rates across each tier category. With annualized ramped manufacturing capacity on track to grow 64% Y/Y in 2010–and then again by 61% during 2011–oversupply and lower utilization rates may simply become an unavoidable consequence if demand contracts in several key European markets next year.