Solar photovoltaics companies will stop chasing market share in 2012, shifting instead to profitability strategies, asserts NPD Solarbuzz. 2011’s over-production, excessive inventories, and price decline are the backdrop to this 2012 strategizing.
December 19, 2011 — Solar photovoltaics (PV) companies will stop chasing market share in 2012, shifting instead to profitability strategies, asserts NPD Solarbuzz in its Quarterly Report. The race to market share was one factor in a tremendous price decline for solar modules through 2010 and 2011, which cannot be sustained with such low or nonexistent profit margins, said Craig Stevens, president of NPD Solarbuzz.
China and the UK are seeing higher-than-expected PV demand at the end of 2011. Global demand for solar energy will grow 6% in 2012, from 23.6GW in 2011, with Europe’s slowdown offset by 43% growth in the rest of the world. This increasing diversity in solar market consumers will play a role in how solar PV companies rebuild their profit margins. 2011’s over-production, excessive inventories, and price decline are the backdrop to this 2012 strategizing.
The latest 2011 global PV market forecast is 23.6GW, up 22% Y/Y. Solar manufacturers reduced their global 2011 shipments goal from 28.2GW to 23.3GW. Solar cell manufacturing will be flat in 2012, starting off with a 5% quarter-to-quarter drop in Q1 2012 due to seasonal slowness and shrewd inventory management. Global module inventories will be reduced to 7.3GW by the end of 2011, lower than NPD Solarbuzz?s original forecast of 8.6GW.
|Figure. Module shipments (GW) from solar PV manufacturers. Source: NPD Solarbuzz Quarterly report.|
Downstream companies, particularly in Europe, aggressively reduced inventories in Q3 2011, cutting 19 inventory days, with a further 45-day drop projected by the end of Q4 2011. However, the dramatic 17% reduction in module prices in Q3 2011 contributed to inventory write-offs of over $300 million in the quarter.
Gross margins for vertically-integrated Chinese tier 1 cell and module manufacturers decreased two percentage points Q/Q in Q3 2011, while Western and Japanese manufacturers dealt with negative margins for the second quarter in a row. Margins for Chinese tier 2 and other Asian producers tracked by NPD Solarbuzz are also negative now. The 15% cut in German tariffs on January 1, 2012 all but ensures further reductions in module prices in the seasonally weak first quarter. Polysilicon prices that had held up until Q3 2011 have now undergone a dramatic reduction as spot prices have taken their toll on contract pricing.
NPD Solarbuzz is a market research business focused on solar energy and photovoltaic industries. For more information, visit www.solarbuzz.com.