by Edgar Gunther
Contrary to my stated
goal, the Photovoltaics:
8 Trends to Watch in 2011 review and
2012 photovoltaic (PV) trends and predictions post has once
again extended well into February. As usual, I won’t be grading
on a curve.
Photovoltaic
Market Demand Growth
Last year, I said:
In 2011, I predict at least 35% global PV installation demand growth despite Feed-in Tariff (FiT) headwinds in Germany, Italy, France, the UK, Ontario, and the Czech Republic.
Grade: Pass
To be honest, I’ve been pessimistic since midyear 2011 and was even more so when there was limited demand elasticity impact from declining module prices on 3Q11 (third quarter of 2011) PV installations. Perhaps it was my turn for PV business “Doom and Gloom, an Overreaction”.
Let’s credit IHS iSuppli (21.2 GW, GigaWatt), IMS Research (22-24 GW), and Solarbuzz (23.6 GW) for sticking with their 2011 PV forecasts albeit with upward revisions although installations pushed out into the fourth quarter. Both IMS Research and iSuppli now believe global 2011 PV installations exceeded 26 GW.
In the second part of the prediction, I said:
I don’t see the US more than doubling again in 2011 so PV installations will be below 2 GW.
Grade: Pass
While the final numbers are not yet in, Greentech Media Research has projected about 1.7 to 1.8 GW of US PV installations in 2011 based on the U.S. Solar Market Insight Report collaboration with the Solar Energy Industries Association (SEIA).
In 2012, I predict at least 25% global PV installation demand growth. I am tempted by the under since the early year Feed-in Tariff (FiT) headwinds seem stronger than ever with serious talk of a 1 GW cap in Germany and PV installations in Italy expected to decline sharply from 2011. Has the German PV market peaked with the estimated 7.5 GW of installations in 2011?
Per “Solar CEOs See Boom in China Will Ease Glut in 2012: Energy” by Alex Morales and Jacqueline Simmons for Bloomberg, Trina Solar Limited (NYSE:TSL) CEO Jifan Gao expects 5 GW to be installed in China and “global demand of 30 gigawatts to 35 gigawatts” in 2012.
For the US, I’ll prognosticate at least 75% PV installation demand growth buoyed by modules purchased under the expiring 1603 Treasury Grant safe harbor, utility scale solar projects, and residential growth.
1603
Treasury Grant and Tax Equity
As far as I can tell, the Payroll
tax cut extension deal on the table does not
include the extension of the 1603
Treasury Grant Program (TGP). Outside of the
budget, this may be the last opportunity to revive the program
until after the US 2012 Presidential Election.
The scramble for tax equity already began last year when “Solar Industry Momentum at Risk” by Arno Harris at the Clean Energy Future Blog marked the point when new solar project development for 2012 and beyond was impacted by the 1603 TGP expiring yearend 2011.
US
solar trade claim against China
“Solar
Trade War: It Just Doesn’t Matter” by
Eric Wesoff at Greentech Media argues the impact of tariffs,
punitive or otherwise, on Chinese solar manufacturers will be
limited because of a shift to regionalized manufacturing of
“trade-compliant” cells and modules.
For political reasons, I’ll go further to argue the imposed tariffs will not be punitive but amount to a slap on the wrist. Indications are China will respond with equivalent retaliation against polysilicon imports from the United States. The message is abundantly clear from a headline just today at DigiTimes: “Four China polysilicon firms demand government start anti-dumping and anti-subsidy investigation against US firms, according to China media”.
I think the Harmonized Tariff System of the United States (HTSUS) schedule for the complaint subheadings will impose duties in a range from 2.5% to 10% on cells and modules manufactured in China and imported to the US. The duties will be tiered; cells will have a lower tariff than modules to encourage NAFTA (North American Free Trade Agreement) based module assembly.
Why these duties? Back in 2009, Trina Solar received an unfavorable ruling classifying solar modules as DC generators because of the bypass diodes and was required to pay a 2.5% duty. While the tariff ruling was reported by the New York Times in “Solar Panel Tariff May Further Strain U.S.-China Trade”, the revocation on technical grounds [DOC] a year later was not publicized. The Solar Energy Industries Association (SEIA) lobbied for the reversal. I believe the incident provides a useful benchmark for reasonable tariffs on Chinese solar cell and module imports to the US that will be reflexively imposed on US polysilicon imports to China in response.
I don’t know why, but CASM versus CASE reminds me of Spy vs. Spy.
Polysilicon
and solar grade silicon outlook
Regarding polysilicon, I said:
I’ll hazard to guess polysilicon spot prices will remain below $100 per kg in 2011 if solar companies plan to make profitable PV modules for declining FiT end markets. Long term polysilicon supply contracts are the only way to be competitive in the PV industry if you are not vertically integrated.
Grade: Fail
Well, my price prediction wasn’t bold, but my second statement has been disproven by contract cancellations and prepayment forfeitures in favor of polysilicon and wafer supply from the spot market.
The Photovoltaic Polysilicon Conundrum did resolve itself in the 4Q11 (fourth quarter of 2011) with polysilicon spot prices crashing below $35 per kg (kilogram) to $24 per kg with some reports from China as low as $21 per kg.
On the 2012 polysilicon outlook, Mr. Johannes Bernreuter, head of Bernreuter Research, said:
Even if only the four or five largest polysilicon manufacturers in China survive, the global production volume in 2012 could still be around 300,000 MT. So, there is continuing pressure to lower utilization rates or shut down production since 250,000 MT of supply should be sufficient even in an optimistic scenario. If the photovoltaics market should actually rise to 35 GW this year – the upper end of Trina’s forecast – I would expect the total polysilicon demand (including the consumption of the semiconductor industry) at approx. 280,000 MT.
I expect polysilicon spot prices will remain below $38 per kg in 2012 and may briefly dip below $20 per kg at some point later in the year as the largest polysilicon supply versus demand correction since the Internet bubble plays out.
Thin
Film Photovoltaics
For thin film PV, I said:
In 2011, I eschew the CdTe (Cadmium Telluride) followers and assert MiaSol