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Solar PV capacity expansion slows to 10% in 2012

The expansion of solar photovoltaic (PV) module, cell and wafer manufacturing capacity will slow dramatically throughout the rest of 2011 and the first half of 2012, according to IMS Research.

By Kari Williamson

Almost 30 GW of solar PV capacity has been added since the start of 2010, but expansions have finally slowed in response to slowing demand in many key regions and a severe oversupply of solar PV products.

IMS Research estimates that over 50 GW of global solar PV module manufacturing capacity will be in place and operating by the end of 2011 - an increase of over 54% since the start of the year. This is despite annual global demand only growing by 19% to 23 GW.

However, wafer, cell and solar PV module production capacity expansions are now forecast to dramatically slow in response to a huge oversupply of products throughout the supply chain and uncertainty over future demand in major markets such as Italy, Germany and UK and capacity will expand by less than 10% in 2012.

As well as suppliers cutting back and delaying expansion plans, many of the largest solar PV suppliers, as well as smaller tier-3 Chinese suppliers, are stopping production altogether.

Sam Wilkinson, report author and Senior Research Analyst at IMS Research, says: “A number of manufacturers have recently announced suspended production or closure of production facilities. As well as a number of high-profile bankruptcies, German and Norwegian manufacturers, Conergy and REC Group, have also announced that they will shut cell and wafer lines, whilst other suppliers such as Photowatt are reducing production.”

IMS Research has also discovered several suppliers which are not obliged to publicly reveal details of their operations have made similar moves.

“In contrast to the rush towards vertical integration that we’ve observed for last few years, we are now seeing vertically-integrated module suppliers reduce or suspend production of cells and wafers,” Wilkinson adds.

“With the supply of these products exceeding demand by such a margin, top-tier branded cells and wafers are available at incredibly low prices and many suppliers are favouring purchasing cells and wafers on the spot market over manufacturing them internally.

“Similarly, we have also seen suppliers willing to accept significant charges to cancel long-term supply contracts in preference of the flexibility allowed by purchasing on the spot-market in today’s difficult conditions.”

IMS Research predicts that solar PV manufacturing capacity will continue to increase over the coming quarters, but at a far slower rate than the industry has previously seen, and much of the new capacity over the next year added by start-ups executing their market entry plans, rather than existing suppliers expanding their capacities.

IMS Research forecasts that solar PV module manufacturing capacity will increase by just 6% during the first half of 2012, despite having increased by over five-times this amount in a similar 6 month period one year ago.

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