This year marked the PV industry’s first solar cycle, with end-market demand shrinking 14% year-over-year, according to the DisplaySearch Q4’09 Quarterly PV Cell Capacity Database & Trends Report.
Thecontraction was caused by changes in Spain’s generous incentive policy,and was severely aggravated by the worldwide economic crisis and tightcredit markets, DisplaySearch says. Excess manufacturing capacity hashelped push average PV system prices down more than 25%. But theselower prices, diversification of the demand base and positive incentivemovement in multiple regions are now expected to drive substantiallyhigher demand in 2010.
"Despite the long term bright outlook forsolar, 2009 demonstrated the industry’s cyclicality and that it isstill highly dependent on incentives," states Charles Annis, vicepresident of manufacturing research at DisplaySearch. "During 2009,there has been nearly 60 percent over-supply in cell capacity, whichmeans that average fab utilization rates have only been around 40percent industry-wide.
"In the first half of 2009, most solarcell manufacturers were under severe pressure and were losing money,"he continues. "However, because the PV industry is so broad-based anddiverse, many of the leading producers have already returned toprofitability and are running factories at high utilization and movingforward with expansion plans."
In 2009, solar cell manufacturingcapacity will grow 56% to more than 17 GW, DisplaySearch predicts. Cellcapacity growth is expected to slow somewhat in 2010 and 2011, asdemand starts catching up to capacity.
Due to the current cellovercapacity, some companies are shuttering older lines and delayingramp up and new investments. For example, Q-Cells is shutting down itsfirst four lines in Germany, as they are not as productive as newerfabs, and adjusting its ramp-up at newer Malaysian lines.
Thischange leaves Q-Cells with 836 MW of ramped capacity, causing thecompany to slip to fourth place in the 2009 capacity ranking behindFirst Solar, Suntech and Sharp, with cell capacities of 1,092 MW, 950MW and 870 MW, respectively.
On the other hand, many othercompanies clearly believe in the long-term, high-demand growth scenarioand are moving forward with large-scale capacity projects. In Japan,Showa Shell Solar is expected to start construction next year on a 900MW copper indium gallium diselenide product factory in Miyazaki, andSharp just reiterated its plans to begin ramping its 480 MW thin-filmline in Sakai by March 2010 producing triple junction a-Si modules at10% efficiency.