Changing Global Solar PV Supply Chain Dynamics – Oversupply Woes To Affect Profitability

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					                     Changing Global Solar PV Supply Chain Dynamics –
                          Oversupply Woes To Affect Profitability
       Reference Code: GDAE0120VPT                                                                                                          Publication Date: November 2011


       1         Table of Contents
       1 Table of Contents.................................................................1
        1.1 List of Tables .................................................................1
        1.2 List of Figures ................................................................1
       2 Summary .............................................................................2
       3 Changing Global Solar PV Supply Chain Dynamics –
         Oversupply Woes To Affect Profitability ...............................2
        3.1 Growing Supply Surplus ................................................2
        3.2 Oversupply Causing Inventory Pile-up ..........................2
        3.3 Declining PV Module Prices and Shrinking Supplier
             Margins .........................................................................2
        3.4 Refocusing on Cost Reduction and Brand Development
                   3
        3.5 Market Consolidation.....................................................3
        3.6 Changing Role of Thin-Film Technologies ....................3
        3.7 Key Industry Developments Defining Trends ................3
       4 Appendix ..............................................................................5
        4.1 Abbreviations.................................................................5
        4.2 Methodology ..................................................................5
        4.3 Contact Us.....................................................................6
        4.4 Disclaimer......................................................................6



       1.1       List of Tables
       Table 1:       Comparison of Revenues to Shipment Ratio for Q2
                      2011 and Q2 2010 ....................................................2
       Table 2:       Abbreviations ............................................................5



       1.2       List of Figures
       Figure 1: Comparison of Production Capacity and Demand
                 Trend, Global, MW, 2004-2015, ...............................2
       Figure 2: Comparison of Gross Margin for Q2 2011 and Q2
                 2010 .........................................................................3




                                                                                                                                          GDAE0120VPT /Published OCT 2011/ Page 1
Changing Global Solar PV Supply Chain Dynamics                                                                                                                      Market Analysis Alert
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       2          Summary                                                                      3.2      Oversupply Causing Inventory Pile-up
       The global solar PV supply base is currently going through a                            Following a tight supply scenario in 2009, module companies
       transition, owing to a significant capacity addition.. The supply                       continued capacity expansion in 2010 and 2011. Significant
       base has grown significantly, while there are indications that the                      capacity additions and capacity utilization to maintain
       installations growth rate would slow down as leading PV                                 operations have resulted ininventory pile up. If tier-1 companies
       countries cut PV tariffs. However, companies across the PV                              sustain their shipment guidance for 2011, module shipments
       supply chain have continued to expand their capacity bases.                             are expected to be about 125% of expected demand by the end
       This has resulted in a scenario of oversupply that will trigger                         of 2011. Moreover, the scenario is expected to continue into
       changes in the PV supply chain such as market consolidation,                            next year unless production cuts are implemented. Given the
       inventory pile-up, declining module prices, shrinking supplier                          current rate of production and capacity addition, the year-end
       margins,      technological     role-change     and      changing                       module inventory for 2012 could reach about 60-70% of 2013’s
       commercialization strategies for PV players.                                            expected demand. However, a significant capacity addition in
                                                                                               emerging markets such as India and China could bring down
       3          Changing Global Solar PV Supply                                              the inventory pile up levels.
                  Chain Dynamics – Oversupply Woes
                  To Affect Profitability                                                      3.3      Declining PV Module Prices and Shrinking
                                                                                                        Supplier Margins
       3.1        Growing Supply Surplus
                                                                                               The table below compares the year-on-year change in the
       The PV installation base has enjoyed significant growth over                            revenues to shipment ratio of primarily module companies. The
       last three years. As a response, module companies have                                  ratio shows significant decline owing to a sharp fall in module
       ramped up their production capacities. However, the market                              prices, which has been primarily driven by the oversupplied
       growth rate is expected to slow down over the coming years                              scenario of the market. The oversupply scenario has resulted in
       owing to tariff cuts in traditionally major PV markets. Given this                      increased market competition for limited demand, forcing
       anticipated decline in growth rate of installed capacity, the                           companies to reduce their prices in order to win contracts.
       current installed production capacity of PV equipment is                                While this scenario is expected to be beneficial to PV project
       significantly higher. A comparison of PV module production with                         developers, it is worth noting that as the price decline is driven
       the PV demand projections indicates that current production                             by increased market competition and is not owing to improved
       capacity would have to be operated at a 50% utilization rate in                         supply chain economics, such a decline rate is not sustainable.
       order to maintain minimal inventory levels and controlled supply
       volumes. If companies fail to 
				
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Description: Changing Global Solar PV Supply Chain Dynamics – Oversupply Woes To Affect Profitability Summary The global solar PV supply base is currently going through a transition, owing to a significant capacity addition.. The supply base has grown significantly, while there are indications that the installations growth rate would slow down as leading PV countries cut PV tariffs. However, companies across the PV supply chain have continued to expand their capacity bases. This has resulted in a scenario of oversupply that will trigger changes in the PV supply chain such as market consolidation, inventory pile-up, declining module prices, shrinking supplier margins, technological role-change and changing commercialization strategies for PV players. Scope The scope of this study includes - - Changes dynamics of global Solar PV supply chain - Global Solar PV Demand and Supply Scenario Reasons to buy - The report studies the changing supply chain dynamics of the Global Solar PV Market. - It also analyses the shrinking supplier margins caused due to decline in solar module prices
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