PV Manufacturing & Capital Spending Tool from information and analytics provider IHS says that global capital spending by producers of photovoltaic (PV) modules, cells, ingots, wafers and polysilicon is expected to rise by 30 per cent in 2014 to reach US$3.0 billion. This will mark the first time that expenditures have increased since 2011, when they grew 8 per cent.
The projected growth will bring to an end a two-year period when spending dropped – by a 72 per cent in 2012, and by an anticipated 36 per cent this year in 2013. During this period, PV industry capital spending will plunge by a total of US$10.6 billion, falling to US$2.3 billion in 2013, down from US$12.9 billion in 2011.
Solar industry players engage in capital spending in order to purchase manufacturing equipment and facilities used to produce PV raw materials or products. Spending has fallen in recent years because of massive overcapacity and oversupply, which has sent prices down throughout the supply chain.
However, a sustained increase in capacity from emerging economies is set to spur the 2014 recovery.
“South America, Africa and the Middle East now are leading the world in solar capacity additions –and they also are leading the capital expenditure segment of the PV business out of its slump,” said Jon Campos, solar analyst at IHS. “The overcapacity in PV production mainly has been concentrated in the developed solar regions of the United States, European Union and China. But as demand expands in new areas, PV manufacturers are gaining interest in producing their wares in these regions, resulting in new factory openings and boosting local capital spending.”
After going up by 23 per cent in 2013, solar capital spending in emerging economies is expected to rise in the low 40 per cent range for every year through 2017. In contrast, following zero growth in 2013, the established markets are expected to shrink by 5 to 10 per cent during every year through 2017.
Among all the emerging economies, the largest percentage increase in capacity is occurring in South America, Africa and the Middle East.
Emerging markets account for 7.9 gigawatts (GW) of the world’s total announced capacity for PV materials and products from ingots through modules, with the potential to climb to nearly 11GW by 2017. Capital investments for the foreseeable future will largely remain in the areas of crystalline wafer production, cell and module equipment.
“Our research is showing a return to market equilibrium with regard to supply and demand,” Campos said. “Overcapacity seems to be correcting itself, and from the last few financial announcements, a handful of solar companies have returned to profitability and widened margins.”