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EnergyTrend: PV Oversupply to Continue through 2016, First-Tier Players to Secured Foothold

published: 2012-11-14 17:01
While solar-panel installation is expected to enjoy further growth in 2012, concerns of a slowing demand still loom. Given that the demand growth is expected to continue lagging behind capacity expansion even when emerging markets have experienced ticked up installation rates this year, issues such as oversupply, irrational competition among players, risks of bankruptcy and fragile financial status continue to draw concerns.  Looking forward to 2016, EnergyTrend, the green energy research division of TrendForce, expects capacity expansion to persist and consolidation among manufacturers to continue, despite the dismal environment which has already lasted for a year. Industry players are expected to run on high utilization rates to digest capacity expansion and to offset fixed cost, and will strive to get a bigger bite of the market. Oversupply in the production of polysilicon, wafer and solar panels, as such, should continue to upset PV prices and development. 
Top-ten PV market in 2013
Source: EnergyTrend 2012Q4 Report
With PV production capacity expected to grow throughout the supply chain, the strongest productivity gains would be derived from the cell segment in which silicon wafer and module are expected to deliver stable growth. In the silicon wafer segment, capacity expansions are expected to continue through 2016, and will be driven by first-tier manufacturers with aggressive market share pursuits rather than by vertical integrators who have lost interest in the upstream segments. According to EnergyTrend’s Gold Membership Market Report, top ten silicon wafer makers are expected to hold a combined market share of 70% in 2016, implying that the market will be more condensed among the top 20 manufacturers. EnergyTrend’s research findings indicated that the financially-fragile companies –those within the silicon wafer segment in particular— with either negative or decreasing marginal returns will be forced to quit by the deep-pocket leading players. 
Capacity growth within the PV cell segment is expected to be the most notable, given that cell manufacturers still maintain a respectable portion of the market, and that increasing downstream demand is expected to help PV module and cell makers expand their market share. The cell manufacturers with inadequate technology to raise product efficiency and financial problems will most likely be eliminated from the intense business competition.
For the module segment, given the lower entry barriers resulting from low technological requirements, and taking into account the lower amount of costs required to control production lines, elimination of manufacturers is expected to take longer periods of time. Restricted by trade regulations and tariff concerns, Chinese venders opt to establish or shift their production sites beyond the mainland. The reallocation of production lines and consistent overseas investment would not only prevent downsizing, but also ensure further capacity expansion through 2016. Consolidation is also expected to take place in the production lines previously owned by European or second-tier western manufacturers.  
Worldwide PV Demand, 2010-1015 (MW)
Source: EnergyTrend 2012Q4 Report
The segment would be in a more disciplined state as most vendors have their shipments closely monitored and control lean inventory levels to stay sensitive to real-time demand trends. Module’s brand recognition will turn out to be a critical development factor as demand begins to build up after 2014 and system developers request for better quality products. The module market would reach a point where professional brands and OEM become critical, with first-tier manufacturers gaining competitive edge in terms of technology, cost and financial status. Irrational price war, in turn, would no longer be required to drive competitors out of the market; smaller-scale manufacturers in this field are expected to maintain a relatively low utilization rate as most still suffer from idle capacity. 

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