In a webinar hosted by Henning Wicht, Senior Director & Principal Analyst, Photovoltaics and MEMS Research at iSuppli Corp., it was noted that the massive increase in production of polysilicon, cells and modules will result in plunging prices across the supply chain. These price decreases will generate a divide between winners and losers in the photovoltaics industry, with those achieving a low cost-per-watt, such as First Solar, having the upper hand.
The global economic downturn and restricted access to capital are projected to limit the growth in PV installations to 4.2GW in 2009, a Year-on-Year growth of only 10%. The corresponding figure for 2007 was 40%, while 2008 saw installation growth of 50%.
iSuppli is now forecasting a return in 2010 of the high growth rates that the industry has come to expect, boasting over 6GW of installed capacity and showing potential for 10GW in 2012. However, overcapacity is going to become a major problem for the industry.
Polysilicon production is projected to reach 100,000MT, or 12GW, in 2009. Planned polysilicon capacity expansions could see that figure climb to over 250,000MT by 2012, or approximately 38GW. While demand for polysilicon is expected to grow by 34% in 2009, it seems supply will shoot up to 112%, leading to a spectacular fall in polysilicon prices.
The 2008 polysilicon price peak saw the cost reach approximately US$400 per kg, but this figure is expected to fall to an average of US$250 per kg in 2009. Prices are forecasted to fall to below US$150 per kg in 2010, below US$100 per kg in 2011 and below US$50 per kg in 2012. At these low selling prices, it is survival of the fittest, with only the most cost-efficient polysilicon producers being able to sell above cost.
A further oversupply problem is coming to the fore, says Wicht. The vast discrepancy between PV module production and installations will result in module production reaching approximately 11GW in 2009, compared to installations at 4.2GW. Overcapacity in module production will exceed 160% in 2009 and remain above 100% through 2012, bringing silicon module prices crashing down to between US$2.50 and US$2.75 per watt.
The pure-play module manufacturers will find it increasingly difficult to compete, with their module prices in the range of US$3.45 per watt. Integrated cell and module manufacturers, such as those with a cost-per-watt of US$2.48, could fare better, but it is expected that companies such as First Solar could be the big winners in this struggle. The thin-film leader has the lowest cost-per-watt in the industry, and the company’s future profitability is secure both from a cost point of view, but also because the fundamental attraction of grid parity goals remain in place.