Most solar manufacturing statistics released over the last few years focused on the severity of oversupply and its painful ramifications: how much excess capacity existed, how steeply prices had fallen, how many firms had been forced out of the market, and how many millions of dollars in losses suppliers had racked up.
The last six months, however, have witnessed a strong turnaround in market conditions and significant improvement in solar supply fundamentals. Thanks to burgeoning demand (primarily out of China, Japan and the U.S.) and the retreat, however temporary, of uncompetitive suppliers, pricing has been stable-to-up, profit margins are back in the black, and shipments to all markets outside of Europe have been on the rise.
With 2014 expected to witness a continuation of the supply sector's resurgence, now is a good time for industry participants and observers to move past the overcapacity-induced doldrums of the previous few years and turn their attention to the path ahead. Here are five figures that illustrate the state of solar manufacturing in 2014.
Number of Gigawatt Facilities: 90
Across the key segments of the solar value chain -- polysilicon, wafers, cells, modules and inverters -- GTM Research estimates show that 90 solar manufacturing facilities now have an annual production capacity of 1 gigawatt or greater, more than double the count for 2010. Of these 90 "gigafabs," 36 are inverter assembly plants, nineteen are polysilicon plants, and nineteen are module production facilities (including both standalone module assembly plants and integrated wafer-cell-module fabs). The increasing number of such large plants (owned mostly by established producers such as REC, GCL, Motech and Solar Frontier) and their constantly growing scale means that the barrier to entry for new entrants or potentially disruptive technologies is more daunting than ever before.
Module Manufacturing Cost: $0.48 per watt
For the first time in history, a module company achieved a manufacturing cost of less than 50 cents a watt. That firm would be China-based JinkoSolar, which achieved the feat in the dying light of 2013, using good old-fashioned multicrystalline silicon technology. That Jinko managed to do so ahead of other Chinese peers such as Trina and Yingli was largely due to high exposure to the polysilicon spot market, as well as a high degree of upstream integration: not only does Jinko own the production process from ingot to module, it also manufactures consumables such as junction boxes and frames. While Jinko stood alone in attaining sub-$0.50 per watt-cost in 2013, we expect other Chinese firms to catch up this year, and First Solar's Malaysian plant is also making great strides toward this mark.
Polysilicon Manufacturing Cost: $12 per kilogram
Factors such as a low-cost production location (even for China), the latest in Siemens-based technology, and generous government assistance have given a significant advantage to Daqo New Energy's brand-spanking-new polysilicon plant in the Xinjiang autonomous province. At its current capacity of roughly 6,000 metric tons (MT), manufacturing costs are around $14 per kilogram, which the company aims to reduce to $12 per kilogram after another 6,000 MT comes on-line in 2014. With other new plants from firms such as Wacker, Hemlock and Tokuyama also scheduled to begin operation in 2014-2015 (also employing more modern, lower-cost technology), a pricing environment of less than $20/kg -- until recently associated with a grossly oversupplied market -- can be a sustainable reality.
Polysilicon Pricing Increase: 25 Percent
While the cost curve for polysilicon, especially pertaining to new technologies, will only head further south, don't expect this to be reflected in 2014 pricing trends. Spot prices for solar-grade silicon have rebounded strongly since bottoming out at less than $16 per kilogram in early 2013, and are now above $20 per kilogram for the first time in more than a year and a half. With demand expected to grow strongly in 2014 and only a limited amount of low-cost supply available, we believe this trend will continue over the course of the year. Fortunately for module suppliers and their customers, this shouldn't make too large a dent in their bottom lines -- even if, as GTM Research expects, average pricing for polysilicon increases by 25 percent in 2014, improvements in processing costs and silicon consumption mean that module costs would only rise by a few percentage points.
Thin Film Market Share: 10 Percent
Thin film's relevance to the solar market at large has been on the wane since 2009, when it reached a high of 19 percent of total module production. The reasons for this are simple: barring some notable exceptions, thin film is more expensive, less efficient, and less bankable than Chinese crystalline silicon technology, which dominates the marketplace today. While thin film production levels have increased steadily over the years, they have been easily outpaced by growth in c-Si output, and despite what is expected to be a strong year for industry leaders First Solar and Solar Frontier, GTM Research estimates indicate that thin film will only make up 10 percent of total module production in 2014, its lowest share of the market since in 2006. It's still too early to dismiss thin film as being destined for niche status, but it doesn't bode well for the technology that its largest and most successful proponent, First Solar, has had to resort to becoming its own customer in order to eke out a living.
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Shyam Mehta is Lead Upstream Analyst at GTM Research, where he covers the PV manufacturing sector. Join him and other industry leaders discuss the future of the global solar market at GTM's Solar Summit in Phoenix on April 13-16. For more on GTM Research, click here.