PV industry likely to return to high growth in 2010

AUSTIN, USA: 2009 marked the PV industry’s first “Solar Cycle,” with end-market demand shrinking 14 percent Y/Y, according to the DisplaySearch Q4’09 Quarterly PV Cell Capacity Database & Trends Report.

The contraction was caused by changes in Spain’s generous incentive policy, and was severely aggravated by the worldwide economic crisis and tight credit markets. Excess manufacturing capacity has helped push average PV system prices down more than 25 percent. But these lower prices, diversification of the demand base and positive incentive movement in multiple regions are now expected to drive substantially higher demand in 2010.

Fig. 1: Solar Cell End Market DemandSource: DisplaySearch Q4’09 Quarterly PV Cell Capacity Database & Trends Report

"Despite the long term bright outlook for solar, 2009 demonstrated the industry’s cyclicality and that it is still highly dependent on incentives,” stated Charles Annis, DisplaySearch Vice President of Manufacturing Research. “During 2009 there has been nearly 60 percent oversupply in cell capacity, which means that average fab utilization rates have only been around 40 percent industry-wide.

"In the first half of 2009, most solar cell manufacturers were under severe pressure and were losing money. However, because the PV industry is so broad-based and diverse, many of the leading producers have already returned to profitability and are running factories at high utilization and moving forward with expansion plans. Demand in 2H’09 is proving to be robust and setting the stage for 38 percent growth next year.”

In 2009, solar cell manufacturing capacity will grow 56 percent to more than 17 GW. Cell capacity growth is expected to slow somewhat in 2010 and 2011 as demand starts catching up to capacity.

Due to the current cell overcapacity, some companies are shuttering older lines and delaying ramp up and new investments. For example, Q-Cells is shutting down its first four lines in Germany, as they are not as productive as newer fabs, and adjusting its ramp-up at newer Malaysian lines.

This leaves Q-Cells with 836 MW of ramped capacity, so they have slipped to fourth place in the 2009 capacity ranking behind First Solar, Suntech and Sharp, with cell capacities of 1092 MW, 950 MW, and 870 MW, respectively.

On the other hand, many other companies clearly believe in the long-term, high-demand growth scenario and are moving forward with large-scale capacity projects. In Japan, Showa Shell Solar is expected to start construction next year on a 900 MW CIGS factory in Miyazaki, and Sharp just reiterated its plans to begin ramping its 480 MW thin-film line in Sakai by March 2010 producing triple junction a-Si modules at 10 percent efficiency.