The industry in the past few years was plauged by large price declines. Prices dipped to about $0.9/W.
And some chineese players are reported to have sold modules for a record low of $0.7/W, which is quite shocking. These declines have prompted record installations globally. But the impact on supply chain was felt pretty hard. Once promising upstarts are reducing their capacities or even leaving thee business.
According to GTM, 21GW of PV module manufacturing capacity will come offline by 2015 due to the global market resolving its supply/demand imbalance.
The report estimates that this year alone, module supply will be in excess of global demand by almost 110% (or around 59GW) of total supply compared to 30GW of total demand. Furthermore, GTM expects wafer, cell and module manufacturers to withdraw a combined 60GW of capacity by 2015.
“The PV manufacturing industry has evolved from a period of secular growth, in which profits grew year-over-year, to a period of cyclical growth” said Shyam Mehta, senior analyst at GTM Research and the report’s author. “Fundamentally, this is due to the sheer magnitude of overcapacity that exists in the value chain today and the speed with which feed-in tariffs are being extinguished the world over. We are in a transitional time in the history of the market; the training wheels of subsidies are coming off, and the next few years will see the industry’s first attempt to ride without support. Consequently, the next three years will be an extremely difficult period.”
Mehta additionally mentioned that most module suppliers should not expect to reach financial success by selling commoditized “plain-vanilla” modules simply due to the future outlook of the level of overcapacity and resulting compressed pricing. He noted that only a select few low-cost, top tier firms such as Yingli Green Energy and Trina Solar can attain manufacturing costs of US$0.45 per watt by 2015 and sustain profitability.
