The leading indicators of global photovoltaic (PV) solar industry supply and demand such as: module production, supply and market-demand are expected to be within 8 percent of the second-half 2012 global market demand of 17.2 GW, as a slight sign of recovery for solar, according to a report published last month by NPD Solarbuzz. This follows two years of excessive oversupply on the market, which has wreaked havoc on the upstream and downstream segments of the supply chain.
The oversupply dilemma was fueled by overestimates of demand in the US and Europe as well as module dumping below cost from China noted in the US Department of Commerce case, over this period, led to dramatic price erosion and reductions in corporate profit margins. Many manufacturers built-up large-scale inventories in 2009 and 2010 expecting the US to enact comprehensive clean energy reform that would have immediately boosted demand, while European countries eliminated many government subsidies over the last several years due to escalating debt worries. On the bright side, this same Solarbuzz report states that global PV demand for 2012 is predicted to exceed 30 GW, up 8 percent year-over-year, driven by increased demand during the final quarter of the year from Asia Pacific regions, mainly China and Japan.
Interestingly enough, the growth in the US market is primarily due to mid-size projects that are neither residential or nor utility-scale in size and scope. NPD Solarbuzz reported a study this week that showed that 40 percent of PV solar projects under construction in the US are less than 500 kW in size. California continues to lead all US states in installation capacity sparked by its unprecedented renewable portfolio standard requiring that 33 percent of its future energy be supplied from renewable sources.
Smaller projects are less costly to install, are easier to gain land and building permit approval, and have fewer barriers for critical project financing- plus are deemed less risky. What’s more, government or public buildings often are subsidized by government energy-efficiency grants. Typical examples of mid-size installations include: schools, colleges, municipal buildings, hospitals, and retail stores such as IKEA (see photo of Tempe, AZ store) or Target. The residential solar business continues to be adversely affected by the declines in the US housing market, as the uncertainty over sales and foreclosures has kept many homeowners from investing in solar.
From a manufacturing perspective, many more solar companies have closed facilities or filed for bankruptcy since the high-profile Solyndra scandal. A budding US concentrated PV solar manufacturer, Amonix, recently closed its 214,000 square foot plant in North Las Vegas, Nevada, which was subsidized by over $20 million in federal tax credits and grants. Its business model was focused on capitalizing on higher efficiency cells than conventional technology but at a higher cost; however, overall market demand has been driven by cheaper crystalline silicon cells, since these prices have fallen significantly in recent years. Amonix is one of the latest casualties in the shakeout affecting the global solar industry and especially US manufacturers.