PORTLAND, Ore.—As if the solar panel industry needed more bad news, market watcher Solarbuzz said Monday (Sept. 26) that production cutbacks at leading solar module manufacturers has been insufficient to prevent further inventory buildup, resulting in oversupplies growing into 2012 and likely depressing prices further.
Already casualties of price-erosion include Spectrawatt Inc., a spinoff of Intel Corp., Evergreen Solar Inc. and Solyndra LLC, all of which recently filed for bankruptcy. Many more failures, however, could be imminent through the second half of 2012, when Solarbuzz predicts that demand will finally catch up with supply.
Oversupplies in 2011 have already depressed factory gate prices, which are down 33 percent over 2010, according to the Solarbuzz. The firm estimates that demand in the current quarter is up 20 percent over last year, but just 1 percent over last quarter, portending further market softening that will likely endure through the first half of 2012. Solarbuzz, part of The NPD Group (Port Washington, N.Y.), said European markets have been hardest hit by the slowdown, since most of current growth has been in the U.S. and Chinese markets, with Europe accounting for just 58 percent of global demand compared to 78 percent last year.
Global PV demand falls far short of cell/module inventories which continue to grow due to continued Chinese mass production.
Solarbuzz blames tier-one Chinese manufacturers for the oversupplies, since they have maintained their 2011 shipment guidance volumes despite the global slowdown, resulting in a forecast of 4.4 GWatt of overproduction by the end of the year. These manufacturers were banking on price cuts to stimulate demand in the second half of 2011, but so far that demand has not materialized. And in Europe the situation will only get worse in the fourth quarter of 2011, when crystalline module prices are projected to fall another 18 percent over the current quarter, according to Solarbuzz, which said that gross margins were already down 50 percent in the second quarter of 2011. As a result, Solarbuzz is predicting more consolidations and bankruptcies in 2012.
"Margins are already at a breaking point, thereby increasing the likelihood of more company consolidations and liquidations next year," said Craig Stevens, president of Solarbuzz.
Worse yet is Solarbuzz's prediction that in 2012 Chinese manufacturers are planning to increase production by another 50 percent over 2011, while end-market demand will only increase by 25 percent, further eroding prices and inflating inventories. In its worst-case scenario, manufacturers who refuse to cut back production will cause inventories to soar to 22 GWatt by the end of 2012, instead of cutting back production by 11 GWatt which would be necessary in order to stabilize inventories, according to Solarbuzz.
Indirectly this overproduction and the resulting lower prices will pull more customers to the Solar option. This will result in a permanent increase in the demand in the long run. So in my opinion there is no reason for the manufacturers to panic .
Overproduction should have been obvious with the rush to get production on line a couple of years ago when it seemed like everyone wanted in on the action. Now that they have it, they're looking for a way out. But then maybe the overproduction and resulting drop in prices will stimulate some more growth in installations. The industry is far from mature at this point, so we should expect to see some ups and downs.
Crude - that's the word for the way production is regulated. We have a factory full of 16-bit analog, u-sec timed controllers, finely tuned processes - and a production schedule that a blindfold gorilla could do better. What are all those smart sales, marketing, and finance people doing?
I admit production lines are like supertankers, not very manoeverable, so its sometimes better to keep them clean and running than to stop and foul up the process. A bit like steelmaking?
Is there a good ecosystem for the solar power generation? The price of solar panel is relatively high so the power generated is expensive. No single person would like to pay the bill. I'm wonder if there is another way out beside Government subsidy.
What business model/strategy Chinese manufacturer are using. It looks like a gamble where the stakes are already high but people keep playing until someone drops out. I am sure Chinese company can not keep pushing the price lower as this will hurt them the same.
And realistically this could be considered good news for Solar Energy production, just not good news for Solar Panel makers. Does anyone buying a PC care (other than positive) when DRAM prices crash? ... nope.
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