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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.
The
contraction was caused by changes in Spain's generous incentive policy,
and was severely aggravated by the worldwide economic crisis and tight
credit markets, DisplaySearch says. Excess manufacturing capacity has
helped push average PV system prices down more than 25%. But these
lower prices, diversification of the demand base and positive incentive
movement in multiple regions are now expected to drive substantially
higher demand in 2010.
"Despite the long term bright outlook for
solar, 2009 demonstrated the industry's cyclicality and that it is
still highly dependent on incentives," states Charles Annis, vice
president of manufacturing research at DisplaySearch. "During 2009,
there has been nearly 60 percent over-supply in cell capacity, which
means that average fab utilization rates have only been around 40
percent industry-wide.
"In the first half of 2009, most solar
cell manufacturers were under severe pressure and were losing money,"
he continues. "However, because the PV industry is so broad-based and
diverse, many of the leading producers have already returned to
profitability and are running factories at high utilization and moving
forward with expansion plans."
In 2009, solar cell manufacturing
capacity will grow 56% to more than 17 GW, DisplaySearch predicts. Cell
capacity growth is expected to slow somewhat in 2010 and 2011, as
demand starts catching up to capacity.
Due to the current cell
overcapacity, some companies are shuttering older lines and delaying
ramp up and new investments. For example, Q-Cells is shutting down its
first four lines in Germany, as they are not as productive as newer
fabs, and adjusting its ramp-up at newer Malaysian lines.
This
change leaves Q-Cells with 836 MW of ramped capacity, causing the
company to slip to fourth place in the 2009 capacity ranking behind
First Solar, Suntech and Sharp, with cell capacities of 1,092 MW, 950
MW and 870 MW, respectively.
On the other hand, many other
companies clearly believe in the long-term, high-demand growth scenario
and are moving forward with large-scale capacity projects. In Japan,
Showa Shell Solar is expected to start construction next year on a 900
MW copper indium gallium diselenide product factory in Miyazaki, and
Sharp just reiterated its plans to begin ramping its 480 MW thin-film
line in Sakai by March 2010 producing triple junction a-Si modules at
10% efficiency.
