Solar Panel Supply Glut May Expand in 2012, BNEF’s Chase Says
The glut of photovoltaic panels that wiped $30 billion from solar stocks last year is likely to expand in 2012, forcing manufacturers out of the industry, said Bloomberg New Energy Finance’s Chief Solar Analyst Jenny Chase.
Photovoltaic plant developers will likely install about 28.4 gigawatts of generators this year while manufacturing capacity may touch 45 gigawatts, Chase said. Installations for 2011 were about 28 gigawatts.
Excess capacity cut the price of solar panels in half last year, depressing margins and prompting 15 of the 17 members of Bloomberg Large Solar Index to post quarterly losses in their most recent earnings statements. The index lost as much as 76 percent last year.
“In terms of margins, it’s going to be worse and in terms of companies dropping out, it’s going to be worse,” Chase said in a telephone interview. “The Chinese have made it clear that they don’t intend to prop up uncompetitive manufacturers.”
Chase’s view contrasts with predictions from executives that rising demand in China will help support the industry in 2012.
Suntech Power Holdings Co. CEO Zhengrong Shi last week estimated China may add 4 gigawatts or more of panels, and Trina Solar Ltd. (TSL) CEO Jifan Gao expects 5 gigawatts. That compares with about 2.2 gigawatts installed there in 2011.
Germany, the world’s biggest solar market, fitted a record 3 gigawatts of panels in December as developers raced to meet a year-end deadline for claiming higher rates of subsidies. That brought the annual total to about 7.5 gigawatts and stabilized the price of many components that tumbled earlier in the year.
The spot price of polysilicon, the main raw material for solar panels, has rise for the past four weeks after the rush of German installations cleared out most of the surplus inventory that the industry had built up. Polysilicon fell as much as 67 percent last year.
German Environment Minister Norbert Roettgen said Jan. 19 he plans to reduce aid for solar generators each month instead of the current system of twice-yearly cuts because installations have exceeded the government’s targets.
That decision may support demand in Germany during the first months of the year as investors again look to connect up their generators before the new subsidy regime is introduced, Chase said. “The second half could be a lot worse,” she said.
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