Solar PV capex cuts will ease capacity growth in time for recovery

Much like the boom-to-bust IC industry in recent decades,manufacturers of solar-energy cells and thin films are having adifficult time matching investments for new production capacity withthe recessionary and recovery throes of the fledgling photovoltaic(PV)-device market, based on the analysis in a new 2009 report from ICInsights: Solar Energy: Growth Opportunities for the Semiconductor Industry.

Themismatch of photovoltaic capacity expansions and slumping market demandis underscored by the expected 32 percent increase in global PVproduction capacity in 2009 despite a forecasted 22 percent decline insolar system installations this year, according to the new report.

ICInsights Solar fig1 Solar PV capex cuts will ease capacity growth in time for recovery

AlthoughPV-device manufacturers made known their intentions in late 2008 totrim capital spending, many of the top suppliers have been unable toabruptly halt those expenditures in 2009. Consequently, global PVsolar-device production capacity is expected to rise 32 percent in 2009to a total output capable of generating 11.5 gigawatts of electricity.

Thisfollows a 69 percent increase in installed photovoltaic cell andthin-film (TF) plant capacity in 2008 to 8.7GW, says IC Insights’ newreport. Cuts in capital spending will slow capacity expansion to just15 percent in 2010, but that will come when the solar market begins torecover with a 37 percent growth in system installations next year,based on the repor’s 2009-2013 forecast.

In 2010, IC Insightsbelieves that capex spending levels for PV cell and TF module capacitywill fall further than the 23 percent decline forecast for 2009 asproducers confront rising inventory stockpiles and plummeting capacityutilization.

The report shows global solar PV cell and TFcapital expenditures falling 40 percent in 2010 to about $680 millionfrom $1.13 billion in 2009, excluding capex on assembly of cell-basedmodules and panels. However, solar PV capital expenditures will begin asteady recovery in 2011, rising 13 percent that year to $772 millionbut surging 74 percent in 2012 to $1.34 billion, based on IC Insights’five-year forecast (see Fig. 1).

With PV manufacturers unable toabruptly curb additions to production plants, capacity utilizationrates for solar devices are forecast to plummet from 83 percent in 2008to 54 percent in 2009 and to 52 percent in 2010.

However, ICInsights is forecasting a steady rise in plant capacity utilization to63 percent in 2011 and to 82 percent in 2013. The efforts to achievehigh levels of capacity utilization will stretch out to the end of theforecast period and will be an important contributor to the industry’sreduction of the cost per watt of solar systems.

The new 2009solar report estimates that plants in mainland China and Taiwanaccounted for 39 percent of total global PV device production in 2008,with European production at 28 percent of the worldwide total and Japan16 percent. US producers captured only 10 percent of the total in 2008,based on IC Insights’ data.

Source: IC Insights