PV book-to-bill ratio in the red

While the figures are not pleasant – photovoltaic production equipment cancelations are said to have reached US$3 billion by the end of Q3 2012, with order backlogs declining by 30% for four consecutive quarters – the fact the overcapacity issue is being rebalanced is positive.

As analyst Ray Lian points out in NPD Solarbuzz’s latest PV Equipment Quarterly, "Negative book-to-bill metrics suggest that most legacy PV capacity expansion plans have now been cancelled. This satisfies one of the first requirements for the PV industry to rebound from its overcapacity-driven downturn phase."

Overall, the research company predicts that photovoltaic equipment spending will decrease by over 66% this year. In 2013, it forecasts revenues of around $5 billion – similar to 2008 spending levels.

"Equipment spending is not forecast to rebound until at least 2014, with tier 1 spending accounting for over 90% of addressable revenues. PV equipment spending over the next 12-18 months will be comprised of process tool upgrades, advanced high-efficiency pilot lines, and potential geographic capacity diversification to address any trade restrictions or local content requirements," said NPD Solarbuzz in a statement released.

Capacity rationalization

Photovoltaic cell and module manufacturers are still said to be undergoing "painful" capacity rationalization processes. Despite this, quarterly figures for manufacturing indicate that capacity for silicon cells and modules remains at 13 GW. New capacity is said to be canceling out that which is being removed.

In terms of the photovoltaic inverter market, IMS Research has said that 2013 will remain challenging and may not improve until 2014. It added that the recent announcements from SMA and Satcon serve to highlight the current difficult conditions.

While the company predicts a total of 35 GW worth of new installations in 2013, inverter revenues are expected to remain flat as prices continue to decline. "A major geographic shift in demand, coupled with continued, intense price pressure will present a major challenge for the leading PV inverter suppliers in 2013," it said in a statement released.