Global demand for Photovoltaic (PV) panels is fluctuating, causing instability in the supply of solar technology, according to the latest analysis from Solarbuzz Quarterly[1]. While production from Chinese manufacturers has remained steady, the markets for new installations are shifting quickly, as price cuts and regulatory change impact demand.
The impact of this change in demand patterns has been most noticeable in Germany, which has historically been a global leader in PV installations. Its 8GW installed base at the end of 2010 was far more than that of the US, China, and Australia combined, yet new installations appear now to have plateaued. Other national leaders, such as Italy, are seeing similar trends.
However, larger numbers of installations have been seen in the UK, with prices falling by more than 30% over the last 12 months, though this trend may be slowed or even reversed by recent government indications that feed-in tariffs may be cut[2]. In the US, too, residential interest in panel installation is increasing, with the price of panels recently falling below the $1/watt level.
Long-term, the industry expects far higher demand from China and the US, with a Chinese target of 20GW installed capacity by 2020, from an installed base well under 1GW at the end of 2010. But until this demand materialises, existing suppliers are at risk, particularly in the US - Spectrawatt’s bankruptcy application in late August was followed just one week later by Solyndra’s closure of its California-based factory. Earlier in the same month, Evergreen Solar had announced a Chapter 11 re-organization, including the sale of many assets.
The result appears to be a hardening of the manufacturing base around Chinese suppliers, which show no signs of cutting their production targets even as inventory builds up. In fact, manufacture of PV panels may increase by up to 50% in 2012, sustained partly by the competitive advantages of the China Development Bank (CDB), which can directly invest in physical infrastructure at a scale that is out of reach for most nations. This seems to have helped suppliers in China to survive periods of inventory build-up more easily than some of their competitors.
Against a background of regulatory upheaval – including declining Australian subsidies and the revision of feed-in tariffs across Europe – a significant re-alignment of the PV manufacturing industry base is taking place. While governments are keen to tout the economic benefits of ‘green technology’ to help generate growth, at this time, US and European manufacturers face challenges in navigating through a period of shifting demand.
Posted by Ben Thacker
This article is part of a series of Baringa view points on renewable energy. Read our thoughts on:
Wind Farms: http://www.baringa.com/baringa_blog/item/the_rise_of_private_equity_in_wind_farm_ownership/
Wave and Tidal Energy: http://www.baringa.com/baringa_blog/item/the_tides_are_turning/
Green Gas: http://www.baringa.com/baringa_blog/item/green_gas_is_growing/
[1]http://www.solarbuzz.com/our-research/recent-findings/production-cutbacks-insufficient-prevent-solar-module-inventory-buildup
[2] http://www.guardian.co.uk/commentisfree/2011/oct/31/britain-solar-energy-unsustainable-foundations
