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.
If you look at it from a value of inventory standpoint, the inventory growth is not as astounding as it first seems. At a $1.00/watt, that is only $20billion in inventory at the end of 2012 which is not that far from where it was at some point this year.
The price can not be reduced lesser than a certain point as long as it is operated by the private industries. Rather the governments should take initiative to give benefits to the individual customers who use the solar energy.
I think this is a game of playing with the profits only, the companies should look towards environment benefits as well, as the entire world is looking for an alternative energy source and the over supplies of solar cells is resulting, that should increase the usage of the solar cells and more solar farms should come up. If the companies reduce the price of the solar cells, this is surely going happen.
if china will over produce after some time if the sale is not possible then they also need to wind up.so after some time there will be a balance maintained to meet the supply demand positon.Impotant to see is how to increase the usage of these at each and every place.if at all 25 watts can be produced in one square foot area then many applications can be brought in.