the solar future de - henning wicht "how will the dynamics of supply and demand look by 2013?...
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Henning Wicht; Senior Director, Principal Analyst, iSupplyTRANSCRIPT
Applied Market Intelligence
How will the dynamics of supply and demand look by 2013? The Solar Future II: PV Vision and Strategy Conference Munich, June 8, 2010 Dr. Henning Wicht – Senior Director and Principal Analyst [email protected]
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Agenda
The Solar Industry – what is going on?
Solar Installations – how will the market look by 2013?
Supply/Demand - Is Another Crash Coming?
Bottleneck Forecast
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The solar 18 month cycle: From boom to bust and back to boom
The strategic questions of the PV industry Will we see an outbalanced market, can we increase prices?
Shall we procure short-term or do we need long-term contracts for 2011 and 2012?
Which business strategy is best: specialist or integrated?
iSuppli analyzes the industry along the value chain
Silicon and Wafer Cells and Modules PV Installations
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Tracking the solar industry – data, models, forecasts
Company level: Top 60 Solar companies averaging 80% of the market Production data: Production capacity, production,
shipments, utilization rates Financial metrics (32 companies at present): Revenue,
gross profit, COGS, revenue per Watt, cost per Watt
Market level: Polysilicon, solar wafers, c-Si cells, c-Si & TF modules Production data: Production capacity, production,
shipments, utilization rate Supply / demand gaps
Inventory levels Supplier inventory Channel inventory
System demand / installations for 14 key PV countries Installations by market segment Revenues by market segment
Forecast 2014, actual and Historical
(Production capacity: 2010 forecast by quarter Annual forecast to 2014)
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Solar Installations – How will the market look by 2013
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Worldwide PV Installation Forecast
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PV Installations by country
Total PV Installations in MW 2010 2009 2014 CAGR %
Germany 6,600 3,860 4,500 -9* Italy 1,070 582 6,743 58 Czech Republic 1,000 411 840 -4* USA 836 387 5,316 59 Japan 715 400 2,919 42 China 580 200 2,370 42 France 540 220 4,158 67 Spain 450 150 1,100 25 Belgium 420 220 1,405 35 Ontario (CND) 250 57 1,950 67 Korea 145 100 700 48 Greece 100 50 400 41 United Kingdom 95 1 501 52 Bulgaria 93 47 1,067 84 Rest of World 679 352 11,323 102
Total 13,573 7,037 45,290 37.1
* CAGR for Germany and Czech R. is negative since markets are expected to peak before 2014
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Global Demand Forecast – The iSuppli Approach
1. Detailed analysis of key solar markets accounting for 90% of PV installations in 2009 and about 80% in 2014
Europe: Germany, Italy, France, Czech Rep., Belgium, Spain, Greece, Bulgaria North America: USA, Ontario (CND) Asia: Japan, China, Korea Rest of the World
2. Calculation of ROI and time to cash break-even per region and per market segment
5 kW residential rooftop 250 kW commercial rooftop 1 MW ground installation
3. Determine growth corridor by comparison with growth experience in Spain, Germany and Italy
4. Detailed evaluation of regional- and segment-specific parameters Capital availability/ impact of credit crunch, permits, FIT limits etc.
5. iSuppli forecast 2009 to 2014
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PV installations will record again in 2010
Market size differs from XXL to M XXL: Germany 6600 MW XL: Italy, Czech R.*, USA, Japan
700 – 1100 MW
L: France, China, Spain, Belgium, Ontario 300 -600 MW
M: Greece, Bulgaria 50 -200 MW
A total of 13.5 GW of new installations is forecasted
Largest growth is coming from Germany, Italy and Czech* Republic.
*Note Czech Republic PV Moratorium: Czech R. put on hold new PV installations in March 2010 due to risks of grid instability. The current forecast of 1000 MW is uncertain. iSuppli will review the situation in CZ and update the forecast in June 2010
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Germany 2010: monthly installations swing due to FIT changes
Jan. Feb. March April May June July Aug. Sept. Oct. Nov Dec Total
2009 MW* 2,89 16,5 56,3 115 150 205 308 291 327 377 497 1460 3860
2010 MW forecast 100 200 400 800 800 800 200 300 450 450 550 1550 6600
2010 MW* 224 162
* Data Bundesnetzagentur
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The new German feed-in-tariff
What is happening? On May 06, 2010 the German parliament (Bundestag) accepted the
following changes proposed by the Ministry of Environment. New legislation should become mandatory by July 2010
Decision did not pass the Bundesrat (June 04); decision is pending Dates and Content of new FIT probably less sever
Originally proposed Changes by July 2010: One time cut of tariffs
– FIT cut of 16% for all rooftop installations – FIT cut of 11% for ground installation on conversion area (e.g. ex-military) – Self consumption bonus of up to 8 cts/kWh applicable for rooftop – No more funding of ground installations on agricultural ground
• still possible in 2010 if permitted before Jan 2010 Annually decreasing tariffs. Target: 3.0 GW of new installations per year
– FIT decreases 9% per year to compensate/stimulate productivity increase – If installations in the previous year pass the 3.5 GW, the FIT decrease accelerates
• 2011: 1.0% per additional GW
• 2012: 3.0% per additional GW Source: BMU, print 17/1604 dated 05.05.2010
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Installations in Germany are expected to grow in 2011 but are likely to drop from 2012
The FIT, supporting self-consumed PV electricity, will stimulate new installations in 2010 and 2011.
PV systems delivering 30% of self-consumed power, will offer ROI of 8 to 10%.
Ground installations on conversion ground can achieve ROI of 6 to 8%
In 2011 new installations of 9,5 GW are forecasted from todays perspective. Rooftops will dominate with 8,5 GW.
Reaching out to 2012 it is expected that the German government might reduce the FIT again targeting a corridor of 3 to 5 GW of new installations as announced by the Ministry in February 2010.
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Annual PV Systems installations by solar regions, 2009-2014
* Europe (Italy, France, Spain, Greece, Belgium, Bulgaria, excluding Germany) ** North America (US, CND) *** Asia (Japan, Korea, China)
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Annual Installations by Application
Globally -- Commercial Roofs Remain Largest Opportunity
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Supply/Demand – is another crash coming?
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Polysilicon Capacity increases up to 50 GW
Sou
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– iS
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PV
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2009 2010 2011 2012 2013 2014
Total Polysilicon Production Capacity (MT) 122.025 179.732 214.699 241.107 267.039 271.639
Electronic Demand [MT] 14.440 17.048 20.458 22.503 24.191 25.401
Conversion g/W 6,33 5,862 5,730 5,670 5,600 5,540
Solar Polysilicon Production Roadmap (2010-2013) [GW] 19,3 30,7 37,5 42,5 47,7 49,0
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Solar Module Capacity to increase by 100% from 2009 to 2013
Sou
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1 20
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2009 2010 2011 2012 2013 2014
Total Production Capacity (MW) 12.746 18.527 22.877 25.918 27.003 27.838 Additional required Capacity (MW) 1.500 4.000 7.000 13.000 Utilization rates 70% 87% 85% 83% 88% 92%
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The short term view in 2010: PV is a very seasonal business
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PV module capacity (industry roadmap status Q1 2010)
PV module capacity (iSuppli forecast)
Installations (iSuppli forecast) Polysilicon capacity (iSuppli forecast )
Global supply-demand outlook – long-term
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Bottlenecks by 2013 – will Inverters still be the hot spot?
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Bottleneck Analysis
1. Check Supply/Demand Data Demand vs production capacity
Utilization
Channel Inventory, Supplier Inventory
2. Is additional capacity beyond the industry planning needed?
3. If yes, is the industry able to invest or is there a risk of a bottleneck? Solar Modules
Silicon
Wafer
Cells
Inverter
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Data analysis - Solar Modules (c-Si and Thinfilm)
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Solar Modules – bottleneck (2011) is likely to be overcome
The Data shows that additional capacity is needed from 2011
Is the Industry able to add the additional capacity? Pro – Many large size Solar companies are able to invest
Competing on market share, size matters (economy of scale) Outsourcing companies are expanding (Flextronics, Jabil)
Pro – equipment industry can support market growth Numerous module lamination equipment on the market Equipment becomes cheaper for Chinese (weakening Euro)
Pro – ramping times are only 6 to 12 month Con – weakening Euro reduces margins for Chinese prodcuers, less
cash
2011 2012 2013 2014
Additional module capacity MW
1500 4000 7000 13000
Capex (0,2$/W) 0.3B$ 0.8B$ 1.4B$ 2.6B$
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Data analysis - Solar Wafer
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Solar Wafers – yes, a potential bottleneck from 2012 on
The Data shows that additional wafer capactiy will be necessary from 2011 on
Will the Industry be able to invest? Pro – the large players in the market REC, LDK, Solarworld are able to invest Pro – Silicon manufacturers can expand into wafering.
Option for Tier 2 and Tier 3 Silicon producers to increase margins
Con – Less large players than on Module level are interested in wafer; Tier 1 and Tier 2 suppliers are forced to expand
Con – Additional capacity has to be ramped fast already in 2011 Longer lead times and ramping cycle than Module production Higher Investments
2011 2012 2013 2014
Additional wafer capacity MW
0 4500 5500 9000
Capex (1$/W) 4.5 B$ 5.5B$ 9 B$
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Solar Cells – a potential bottleneck from 2012 on, likely to overcome
The Data shows that additional wafer capactiy will be necessary from 2011 on
Will the Industry be able to invest? Pro – as in modules very large players are in the market Pro – as in module business scale matters Pro - Ramping time of 6 to 12 month and Capex of 0,3 to 0,5 $/W are feasible Con – weakening Euro reduces margins for Chinese prodcuers, less cash for
expansion
2011 2012 2013 2014
Additional cell capacity MW
0 3000 5000 9000
Capex (0,6$/W) 1.8B$ 3.0 B$ 5.4B$
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Data analysis - Solar Inverter (Scenario)
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Summary on PV Bottlenecks – Wafering can become a hotspot
Incremental Capacity required (B$) Capex ($/W) 2010 2011 2012 2013 2014 Modules (0.2$/W)
0.3B$ 0.8B$ 1.4B$ 2.6B$
Silicon
Wafer (1.0$/W) 4.5 B$ 5.5B$ 9 B$
Cells (0.6$/W) 1.8B$ 3.0 B$ 5.4B$
Inverters (0.01$/W)
0.12 B$ 0.07B$ 0.05B$ 0.05B$ 0.2B$
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2013 - strong installations and strong seasonality
Installations will grow strongly +30 GW
Germany is expected to resume from 2012 on
In 2013 Europe still installs more than 50% of all PV Systems
Supply and Demand will continue to swing, strong seasonality of demand during the year
New capacity is needed beyond actual announcements
Modules, cells, wafer, inverter
Inverter shortage is not fundamental
Wafer capacities are running short by 2012. Potential Bottleneck.