PV DEMAND LEVELING OUT

PV demand in 2012 below 30GW? A sobering tonic as the industry goes to rehab

Finlay Colville, 30 November 2012 (PVTech)

“…2012 will definitely be remembered as…a year in which forecasts and guidance were rarely achieved…[and] being able to report ‘less amount of losses’ quarter on quarter was marketed as a success…[But] failure to hit the PV manufacturers’ demand ‘consensus’ from mid-year could…sober up the industry…2013-2014 would then be the rehabilitation phase (operating margin break-even) and 2015 the start of prolonged good health (profit-making)…

“Typically, the PV industry started each calendar year with a general ‘consensus’ on annual PV demand. Historically, these levels erred heavily on the side of caution, with PV manufacturers not wishing to over commit…[W]hat transpired over the past few years in the PV industry was that final annual PV demand figures greatly exceeded the industry consensus reached during the first half of each calendar year. And more often than not, the catalyst for this was an eleventh-hour downstream installation frenzy ahead of a 31 December European policy level reset…”

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“By the middle of 2012, most manufacturers had settled on a figure of 30GW when pushed on annual PV demand. In private however, strong confidence did exist…[that] 2012 would follow trends of the previous years…[M]anufacturing largely proceeded…with inventory levels building up along the c-Si value-chain…But 2012 demand is somewhat different to previous years. First, most European countries have learned from previous year-end peaks and adjusted policies to curb these effects. And secondly, much of the mid-year optimism was based upon ambitious Q4 2012 demand targets in ‘new’ PV regions…[I]t is becoming more likely that the mid-year optimism is being replaced with the realisation that final year-end demand for 2012 will not follow the trends of previous years and will not provide a welcome upside boost…

“The absence of a year-end surge in 2012…may finally provide the wake up call that puts an end to flooding the supply channels with product…[N]obody would advocate that the PV industry should revert to a ‘made-to-order’ production system…but the rehab process can only truly start when ASP stability has been achieved. And preventing oversupply is the single most important factor…”

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