Global PV equipment spending (including c-Si ingot-to-module and thin-film panel) is now projected to fall by more than 45% in 2012, down from a historic peak of US$13.1 billion this year, according to the latest Solarbuzz PV Equipment Quarterly report. As a result, PV equipment suppliers are being forced to redefine their product roadmaps to align with the projected upturn in spending after 2012.
Almost half of PV equipment spending in 2011 has been stimulated by new entrants to the PV industry or from existing tier 2 or tier 3 manufacturers seeking to increase revenues simply by adding more capacity. The majority of this investment has turned out to be supplemental to the capacity required to meet short term industry demand. Consequently, revenues available to PV equipment suppliers have been temporarily inflated by US$6 billion during 2011. The scale of this over-investment will not only drive the magnitude of the revenue declines during 2012, but will also prolong the spending downturn period into 2013.
According to Finlay Colville, Senior Analyst at Solarbuzz, Aspirations of rapid market entry or market-share gains from lower tier cell manufacturers have been key factors behind the surplus in equipment spending during 2011. However, the second strong cycle of thin-film investments also peaked this year. This saw considerable funding being allocated to next-generation PV technologies.
Having posted positive revenue growth between Q309 and Q111, PV equipment spending during both Q211 and Q311 has declined by single-digit percentage points, as the slowdown in new capacity expansion starts to impact equipment suppliers' revenues. While strong Y/Y growth of 21% during Q3’11 will be highlighted during company reporting later this quarter, the leading forward indicators show sharp declines in new order intake, resulting from PV manufacturers concerns over capacity and demand levels forecast for 2012. Double-digit Q/Q revenue declines are now forecast between Q411 and Q212.
The only PV equipment suppliers that will be shielded from rapid declines in revenues through 2012 are those with strong order backlogs aligned with polysilicon expansion phases in progress across the Asia Pacific region. This will actually drive Y/Y growth in revenues for a select group of companies meeting this upstream demand.
Conversely, many other PV equipment suppliers will experience Y/Y revenue declines of 30-70%. Equipment suppliers that benefitted most from the c-Si wafer, cell and module expansions of 2011 will be the hardest hit during 2012, as new expansion plans are pushed out or postponed.