June 19, 2014
Munich (June 19, 2014)—Following a weak performance during the first six months of the year, the global photovoltaic (PV) supply chain is set for strong 24 percent growth in the second half of 2013, driven by surging installations, according to analysis from IHS Technology (NYSE: IHS).
Combined revenue for the PV polysilicon, wafer, cell and module industries will rise to $28.7 billion in the second half of this year, up from $23.1 billion during the period from January through June, as presented in the attached figure. Revenue in the first half increased marginally by 1 percent compared to the second half of 2013.
All segments will attain growth in the second half, led by a nearly 30 percent surge in module revenue.
For the entire year of 2014, polysilicon market revenue will expand by 36 percent from 2013, followed by wafers at a 35 percent expansion, cells growing by 18 percent and modules increasing by 17 percent.
“PV solar installations have been decelerating in the first half of 2014 because of a slow start to the year in China,” said Jessica Jin, PV analyst at IHS. “However, installations are expected to gain major momentum in the second half, mainly driven by increases in China, Japan, the United States and the United Kingdom. Double-digit growth in these countries will more than offset major declines in once-hot markets like Germany, Italy and Greece, resulting in a 24 percent global increase in megawatts installed for the year.”
The rise in installation growth will redound to the benefit of top PV polysilicon, wafer, cell and module suppliers. Leading manufacturers are expected to enjoy bottom-line profitability during the third and fourth quarters.
Profitability also will be underpinned by favorable pricing conditions.
Average selling prices (ASPs) for wafers, cells and modules are forecast to decline only moderately through the rest of 2014. Prices softened during the first months of the year, but are expected to stabilize in the second half in parallel with rising end markets.
However, the polysilicon price increase that started in the third quarter of 2013 is expected to come to an end. Polysilicon prices in 2014 will be higher than in 2013 on an annual basis, but in the second half of the year they are predicted to be flat to slightly down.
“The stabilizing pricing environment in combination with strong growth of demand will result in significant revenue growth for the upstream photovoltaic supply chain in the second half of 2014,” Jin noted.
The long-term forecast is sunny
IHS forecasts continuously increasing PV demand in the years 2015 through 2018 with annual growth rates of 10 to 15 percent. By 2018, global PV markets are expected to surpass the 70-gigawatt (GW) mark, up from 47 GW in 2014.
To meet this increasing demand, significant capacity expansions will be required. IHS predicts a new capital spending cycle will commence in 2014. During the next four years, global operational polysilicon capacity is expected to grow by approximately 95,000 metric tons. Wafer capacity will expand by about 28 gigawatts (GW), cell capacity by nearly 27 GW and module capacity by approximately 23 GW.
“Having run their facilities at high utilization rates for the past several months, the big PV suppliers now have enough cash to start preparing for the next phase of growth,” Jin said. “Their profit situation is bolstering their confidence in sustainable market development and propelling capital expenditures. Moreover, R&D efforts of the leading manufacturers will drive down production costs faster than prices decline in the upstream PV supply chain. Therefore, IHS expects the industry’s average gross margin to remain in the double-digit range.”
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