A new Marketbuzz report from solar analysts NPD Solarbuzz forecasts that 2014 will shape up as a classic supply-driven market for the PV industry.
As prices for PV installed systems and modules have fallen over the past three years, alongside a 50% drop in module production costs, causing uncompetitive PV cell manufacturers to exit the market, the number of global PV suppliers fell from 250 in 2010 to just 150 at the end of last year.
With PV demand set to continue its growth and recovery, a more balanced supply-demand picture is emerging, says the report, shifting from the demand-constrained market that stunted growth in 2012 and for much of 2013.
According to the report, capital expenditure throughout the global PV industry fell to an eight-year low last year, triggered by the demand-constrained environment that led to over-capacity and over-supply issues in leading markets. However, these constraints meant the industry was forced to shed a large portion of its suppliers and, as balance returned, China and Japan led the way, with the U.S. market joining the Asian giants to account for 60% of all total annual demand in 2013.
"Looking at the global segmentation of the end-market demand in 2014, it is important again to consider the cumulative demand that is likely to be shipped into China, Japan and the U.S., rather than the specific number of gigawatts in each of these countries," said NPD Solarbuzz senior analyst, Michael Barker. "A shortfall at any given time, in any one of these countries, will likely result in an uptick in demand from the other two."
One scenario that could play out this year is suppressed demand in the U.S. arising from the current International Trade Commission (ITC) investigation against Chinese solar equipment made in Taiwan. Depending on how the ITC rules, China could well increase domestic demand in an attempt to absorb any excess supply from local manufacturers a move that would not only boost Chinas installation figures but also enable solar factories to maintain their currently high utilization rates, suggest the report.
"The solar PV markets in China, Japan and the U.S. are characterized by strong PV project pipelines, flexible and innovative financing vehicles, and proactive government policies that can be adapted to drive short-term demand upside," added NPD Solarbuzz vice president, Finlay Colville. "Understanding the changing supply dynamics into each of these countries during 2014 will represent a key tactical challenge for all module suppliers serving the PV industry this year."