According to IHS (NYSE: IHS), global capital spending by producers of PV modules, cells, ingots, wafers, and polysilicon will rise by 42% in 2014 to reach $3.3 billion. IHS previously forecast an increase of 37% for the year. The new forecast also calls for 32% growth in 2015 to reach $4.3 billion, a significant increase from the older forecast of 5% growth, according to the IHS PV Manufacturing & Capital Spending Tool.
Jon Campos, lead PV capital spending analyst at IHS, commented: “Things are looking brighter throughout the solar industry as PV demand climbs and spreads to new regions. In light of improving sales, PV companies are increasing production. Major manufacturers are indicating that the vast majority of their production upsurge will come from internal resources, requiring even greater increases in capital spending than previously expected.”
The projected expansion in 2014 will mark the end of a two-year period of contraction in spending that resulted from slowing growth and massive oversupply in the industry.
In 2012 and 2013 the solar market struggled with an oversupply situation that led to massive erosion in pricing and financial losses for suppliers. However, the two-year decline in capital spending has resulted in a capacity correction, bringing supply and demand into closer alignment. IHS expects supply and demand to return to balance by late this year or in the first half of 2014.
According to Navigant Research, annual installations of new solar PV will more than double in terms of capacity, growing from 35.9GW in 2013 to 73.4 GW in 2020, and revenue from microinverters and DC optimizers wil grow from $308 million in 2013 to more than $1.9 billion in 2020.
Currently, PV manufacturers are starting to ramp up production, with many already running at full capacity. California-based solar panel manufacturer SunPower recently announced it plans to increase its solar cell production capacity by 25%, or 350 megawatts, by 2015.
However, according to IHS, a distinction must be made between short-term events now unfolding and strategic developments percolating for the long haul.
“Some companies have engaged in contract manufacturing of products from Tier 2 and Tier 3 suppliers to meet sharp increases in demand,” Campos said. “However, sources from multiple Tier 1 players, as well as from smaller companies, have verified that this is a short-term, small-scale tactic. Long-term, large-scale increases in production during the next few years will be accomplished via increases in internal capacity.”
This post was originally written by Jasper Dikmans and published on PV Solar Report.
Original Article on Mosaic