Capital expenditures for equipment suppliers serving the PV manufacturing sector will begin increasing at the start of 2015, NPD Solarbuzz predicts in its latest PV Equipment Quarterly, with PV equipment spending potentially reaching $10 billion in revenues in 2017.
"During 2012 and 2013, solar PV equipment suppliers were confronted by the sharpest downturn ever to hit the sector," said NPD Solarbuzz Vice President Finlay Colville. The decline was caused by strong over-capacity that reshaped the entire PV industry in 2012, which resulted in manufacturers' capital expenditure budgets being put on hold during 2013."
For 2013, PV equipment spending including tool revenues from crystalline silicon (c-Si) makers of ingots, wafers, cells, modules and thin-film panels — declined to an eight-year low of $1.73 billion. This drop contrasts sharply with the previous cyclical peak of approximately $13 billion in 2011, according to the report.
"With capital expenditures largely frozen in 2013, PV equipment suppliers recorded less than $1 billion of net bookings last year, keeping the PV book-to-bill ratio well below parity," NPD Solarbuzz says. "In the absence of new PV orders, many equipment suppliers were forced to restructure internal PV business units and focus on other technology sectors."
Over the next six months, however, end-market solar PV demand will catch up with the 45 GW of effective capacity within the industry, and this will mark the official end of the two-year downturn in capital expenditure, the market research firm predicts, adding that PV manufacturers will then move to add new capacity, which will result in a strong rebound in revenues available to the equipment supply chain.
The first peak in PV capital expenditures, covering the period from 2008 to 2011, provided $38 billion of equipment revenues; however, these revenues were spread across several hundred PV manufacturers and a range of different PV technologies. The next major growth phase for PV equipment suppliers, beginning in 2015, will be driven mainly by leading tier-one PV manufacturers across each stage of the PV value chain.
NPD Solarbuzz expects future PV manufacturing capacity additions to occur in increments of 1 GW or more. "Initially, these additions will be motivated by economy-of-scale benefits in cost reduction and productivity. Thereafter, technology-driven spending, historically of minimal upside revenue potential to PV equipment suppliers, will gradually be phased in, as PV cell efficiencies approaching 20% become the industry standard," the report finds.
C-Si based solar PV modules will retain a market share above 90%, the report adds, and new capacity expansions from c-Si PV manufacturers will dominate the PV equipment spending upturn beginning in 2015; however, the competing thin-film segment will continue to offer revenue potential for the equipment supply chain.
"Strong investments from new thin-film challengers are expected in the coming years, including Hanergy's plan for several gigawatts of new CIGS capacity within China," Colville adds. "New thin-film capacity is also likely to be built in the Middle East and Latin America, as emerging regions seek to enter the PV manufacturing arena and differentiate themselves from crystalline silicon products made in Asia."
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