Analyst: Solar PV struggles with balance, like ICs

Much like the IC industry, the solar PV industry is currently struggling with a disconnect between new capacity investments and output, and the gap is expected to stretch even further through 2010 before pulling back closer in line in 2011, according to a new report from IC Insights.

June 18, 2009 – Much like the IC industry, the solar PV industry is currently struggling with a disconnect between new capacity investments and output, and the gap is expected to stretch even further through 2010 before pulling back closer in line in 2011, according to a new report from IC Insights.

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Capex for PV cell and thin-film module capacity. (Source: IC Insights)
Sensing a looming overbuild beyond anticipated demand, PV devicemakers warned in 2008 that they would trim capital spending, but a projected -23% capex decline in 2009 (to $1.13B) won’t offset a 32% increase in PV cell and thin-film production capacity to 11.5GW (though that’s half the 69% rate in 2008), vs. a -22% decline in solar system installations, the firm says. The result: “rising inventory stockpiles and plummeting capacity utilization,” from ~83% in 2008 to 54% in 2009.

The disconnect between capex and capacity will start to fix itself in 2010, the firm says, as capex is slashed another -40% to ~$680M (excluding assembly of cell-based modules and plants), and PV cell/TF module capacity sinks another 23%, pushing utilization rates down another couple of points to 52%. Meanwhile, PV system installations will surge again with 37% growth. By 2011 things look much more aligned (at least temporarily): a moderate 13% increase in capital spending (to $772M), and utilization rates up to 63%.

But much like the IC industry, the fledgling PV sector is unlikely to keep things in balance for long. IC Insights says capex will spike 74% in 2012 to $1.34B, and another 47% in 2013. But the result will be another surge in utilization rates (back up to 82% by 2012), which the firm says is key to reducing cost/W of solar systems.

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