IMS Research estimates that over 50 GW of global 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 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.
The report reveals that as well as suppliers cutting back and delaying expansion plans, many of the largest suppliers, as well as smaller tier-3 Chinese suppliers are stopping production altogether. Sam Wilkinson, report author and Senior Research Analyst at IMS Research commented “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 ,” commented Wilkinson. “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 favoring purchasing cells and wafers on the spot market over manufacturing them internally ,” Wilkinson added. “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 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 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.
Detailed analysis of supply and demand dynamics in this market is available from IMS Research’s quarterly PV cell and module report .