MAKING SUN IN THE WORLD

The Global PV Manufacturing Landscape in 2012 and Beyond: A Brave New World; An excerpt from GTM Research’s latest report on the volatile global PV supply landscape.

Shyam Mehta, July 9, 2012 (Greentech Media)

“… The 2009 edition of [GTM Research's PV Technology, Production and Cost: 2012-2016 Outlook]…was written during an uncertain time, when the constraint that had limited the growth of the industry for many years -- namely, polysilicon -- was unwinding, and very quickly…Along with most of the industry, we predicted that the solar industry was entering a new era, one of structural oversupply and rampant consolidation, from which it would not recover easily.

“…[But] the industry bounced back strongly in mid-2009, and 2010 turned out to be the industry’s most successful year in memory, marked as it was by booming installation growth, supply chain stability and attractive profit margins. We had badly underestimated the tremendous appetites of markets with generous feed-in tariffs -- primarily Germany and Italy -- for PV. Over 20 GW of systems were constructed in 2010 (although only around 17.5 GW of those were connected to the grid), compared to mid-year analyst estimates of around 12 GW…”

click to enlarge

“…[Now there is] the same gaping supply-demand chasm to which there seems to be no end in sight; prices at break-even levels or worse for most of the industry; and a global finance bottleneck replaced with the rapid and irreversible evaporation of support for feed-in tariff programs…We don’t plan to underestimate the cost reduction potential of c-Si technologies going forward. That industry has sheer momentum behind it…[T]echnology innovation will happen at breathtaking speed, helping to push c-Si module costs toward the $0.50/W mark at 17% module efficiencies over the next half-decade. We also don’t plan to underestimate the lucre that even cooling uncapped FIT markets still have…[but] pricing and demand [don’t] have a nice, simple relation in terms of elasticity: customers will wait to purchase equipment for months if they think prices will come down further, but then install gigawatts of PV in a few weeks if those weeks precede a major tariff reduction…[causing] short periods when demand peaks…

“…[W]e have still not shaken the ghost of 2009-2010…[analysts] must present their construction from the ground up, giving the reader a transparent and quantitative understanding of how…[forecasting] depends on key assumptions, and how sensitive the results are to them. This does not just provide value in terms of content (i.e., if demand was 15% greater than expected and capacity retirements 15% higher, industry leader module margins would be 40% instead of the predicted 18% in 2013). It also presents an analytical framework from which the reader is free to isolate elements, substitute assumptions he or she may be more comfortable using, and critique constructively for further refinement and understanding…”

Tweet