The oversupply issue is continuing to dominate the photovoltaic industry, adding to its woes of reduced subsidy support, intensified competition and price erosion. In its latest PV Technology, Production and Cost Outlook: 2012-2016, GTM Research has said that global module supply will outstrip demand by nearly 110 percent, or 59 GW of supply to 30 GW of demand, in 2012.
In addition to 21 GW of module capacity coming offline by 2015, it further estimates that 39 GW of wafer and cell capacity will be removed. "The PV manufacturing industry has evolved from a period of secular growth, in which profits grew year-over-year, to a period of cyclical growth," stated Shyam Mehta, senior analyst and the reports author. This is due, he said, to the "sheer magnitude" of overcapacity and the rate of global subsidy reductions.
He added, "We are in a transitional time in the history of the market; the training wheels of subsidies are coming off, and the next few years will see the industrys first attempt to ride without support. Consequently, the next three years will be an extremely difficult period."
On June 25, NPD Solarbuzz reported that global photovoltaic demand will grow by eight percent in 2012 to 30 GW. The analysts predict that in an environment of "prudent" capacity utilization by manufacturers, equilibrium between supply and demand will be realized.
Yesterday, June 25, IMS Research additionally said that photovoltaic suppliers are suffering from "huge" pressure, following a 75 percent drop in gross profits in the first quarter of 2012. It predicts that they will continue to fall, as a result of the persistent price pressures and competitive market conditions.
Mehta went on to say that most module manufacturers can no longer rely on selling "commoditized ‘plain-vanilla' modules". Chinese tier 1 crystalline silicon (c-Si) suppliers, like Trina and Yingli, he said, will be able to attain manufacturing costs of $0.45 per watt by 2015 and "sustained" profitability. Meanwhile, they can expect to see average selling prices for modules fall to $0.61/W, also by 2015, and average module efficiencies increasing to 16.4 percent, compared to 14.9 percent today.
However, for the majority to survive, it will be crucial to look at how competitive advantage can be created. This echoes sentiments heard at the recent Intersolar Europe event.
Speaking to pv magazine at the show, Chris Beitel, business development manager from silicon cell and module manufacturer, Silevo underlined the importance of offering a differentiated product. Looking around the tradeshow, Beitel said, the majority of modules available offer little differentiation, discounting the brand name attached. However, many believe that it is essential, in order to survive the current difficult market conditions.
GTM Research's Mehta concluded, "Most current PV manufacturers will have to take a long, hard look in the mirror and make tough decisions about their future role in the industry. They can either exit gracefully, or continue as producers in the undifferentiated component market where they have no inherent advantage, or take risks in terms of their business, technology and product models, knowing full well these moves could also end in failure."
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