Revised IHS forecast predicts greater global spending on solar


Worldwide expenditure on PV equipment and production will grow by 42% in 2014 predict IHS, as the analysts revise their earlier forecast in response to improving market conditions.

Suppliers and producers of cells, modules, ingots, wafers and polysilicon are expected to spend a combined total of $3.3 billion next year, or 42% more than in 2013. Originally, IHS had predicted a 37% increase.

However, with market conditions improving and major suppliers once again increasing production after a two-year slowdown and contraction caused by chronic oversupply, IHS foresee a brighter outlook for PV in 2014 and beyond.

Year-on-year, IHS also predict 32% growth for 2015, with an estimated $4.3 billion expected to be invested in the global solar industry for that year – a tremendous upswing from the 5% growth first suggested by the analysts.

"Things are looking brighter throughout the solar industry as PV demand climbs and spreads to new regions," said Jon Campos, lead PV capital spending analyst at IHS. "In light of improving sales, PV companies are increasing production. Major manufacturers are indicating that the vast majority of their production upsurge will come from internal resources, requiring even greater increases in capital spending than previously expected."

The oversupply situation of 2012 and 2013 wrought immense economic turmoil for many suppliers, bringing liquidizations and bankruptcies and stripping back prices. But the two-year contraction in capital expenditure means that in 2014, coffers will be full again and supply will be more closely aligned with demand, with IHS expecting a fully balanced supply-demand chain by the midway point of 2014.

However, despite many PV manufacturers returning to full utilization and peak production, IHS warn that short-term confidence does not necessarily point to a longer-term, strategic plan for the continued fiscal success of the solar industry.

"Some companies have engaged in contract manufacturing of products from Tier 2 and Tier 3 suppliers to meet sharp increases in demand," Campos said.

"However, sources from multiple Tier 1 players, as well as from smaller companies, have verified that this is a short-term, small-scale tactic. Long-term, large-scale increases in production during the next few years will be accomplished via increases in internal capacity."

According to IHS, regions displaying particularly positive growth include Japan and Latin America, while emerging markets such as Southeast Asia could further galvanize the solar industry in 2014. In fact, IHS states that these ‘emerging markets’ currently represent 3% of installed global PV capacity – some 7.9 GW – but possess the potential to grow to 6% of the market share (18 GW) as early as 2017.