Solar

Analyst: Solar cell demand to overtake 2009 overcapacity

Excess manufacturing capacity, the global economic crisis and tight credit, and Spain’s incentive policy dented PV end-demand in 2009 and pushed prices down >25% — but those lower costs, demand diversification, and wider incentives will substantially boost demand in the coming year, according to an analysis from DisplaySearch.

December 10, 2009 – Excess manufacturing capacity, the global economic crisis and tight credit, and Spain’s incentive policy dented PV end-demand in 2009 and pushed prices down >25% — but those lower costs, demand diversification, and wider incentives will substantially boost demand in the coming year, according to an analysis from DisplaySearch.

Overall, solar cell manufacturing capacity is seen expanding >56% in 2009 to >17GW, overreaching by nearly 60% in 2009. Thus, average fab utilization rates were ~40%, and most firms were losing money in 1H09; some (e.g., Germany’s Q-Cells) have shuttered older lines and delayed ramps and investments. “Despite the long term bright outlook for solar, 2009 demonstrated the industry’s cyclicality and that it is still highly dependent on incentives,” stated Charles Annis, DisplaySearch VP of manufacturing research, in a statement. (Not everyone has turtled up, though; in Japan, Showa Shell is about to build a 900MW CIGS factory, and Sharp still plans to ramp its 480MW thin-film line in March 2010 to produce 10%-efficient triple-junction a-Si modules, the firm notes.)

But many leading producers have already started making profits again with high factory utilization, and even moving ahead with expansion plans. The firm sees cell capacity growth slowing in 2010-2011 as broad-based and diverse demand starts to catch up, but its new report on PV cell capacity (Q4’09 Quarterly PV Cell Capacity Database & Trends) predicts that by 2012/2013, solar cell manufacturers will have to add more capacity to keep up with demand.

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Solar cell end market demand. (Source: DisplaySearch)