INDUSTRYNEWS Demanding supply
RADICAL swings in inventory levels for Photovoltaic (PV) solar cells this year are resulting in perilous market conditions that potentially could drive unaware companies out of the market, according to iSuppli Corp.
“The year 2010 represents a boom time for the solar industry, with PV installations doubling from 2009,” said Dr. Henning Wicht, senior director and principal analyst for PV systems at iSuppli. “Makers of solar cells, as well as PV installers and other supply chain participants that can’t deftly manage these inventory swings, may risk being stuck with bloated stockpiles that could drive up their costs and put them at a disadvantage that will be impossible to overcome.”
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This year’s solar supply chain volatility comes amid a doubling in new PV system installations. Worldwide PV installations are projected to rise to 14.2 Gigawatts (GW) this year, up from 7.2GW in 2009. The levels of PV installations in 2010 will be heavily impacted by seasonal factors, marked by a slow winter and a robust summer, Wicht noted.
A more important factor in 2010, he added, is the gold rush mentality prevalent in Germany, the world’s largest PV market. Immediately before the cut in Germany’s Feed-in-Tariff (FIT) in mid 2010, installations spiked as businesses
and consumers rushed to take advantage of the government incentives before they were reduced. A similar phenomenon will impact the market before the next FIT cut announced for the beginning of 2011.
Such ebb and flow of demand will bring swings in inventory levels, Wicht noted. For instance, Days Of Inventory (DOI) for solar throughout the PV channel amounted to 165 in the first quarter of 2010, up a stunning 110.6 percent from 78 in the fourth quarter of 2009. In comparison, channel DOI plunged by more than half in the second quarter, dropping 61.9 percent to 63 days. The third quarter is expected to bring a surge of 66.7 percent to 105 DOI, followed yet again by a drop in DOI during the fourth quarter of 44.8 percent to 58 days. Such volatility is unheard of in the industry and a consequence of the policy in Germany.
Inventory in the PV channel spent all of last year being whittled down from almost
Solar power catching utilites
RESEARCH undertaken by Gartner, Inc. and the Solar Electric Power Association (SEPA) has revealed that utilities are becoming increasingly interested in procuring photovoltaic (PV) solar power generation systems. The Gartner/SEPA survey found that PV is one of the leading technologies for near-term renewable energy for utilities. The survey also found that utilities view onshore wind and biomass as the other key near- term renewable energy sources. Gartner and SEPA conducted a survey of utilities in Europe and the U.S. to understand their requirements and objectives for integrating PV solar systems into their energy generation portfolios. A telephone survey of utility firms in the U.S., Germany, Spain, Italy and France was supplemented by an online survey in the U.S. The survey was done from December 2009 through mid-February 2010 with 134 respondents.
“PV solar systems are a cost-effective means of adding distributed and central generation sources,” said Alfonso Velosa, research director at Gartner. “System costs have decreased by over 30 percent since 2008. This has lowered the cost of electricity from these systems and improved their competitiveness relative to other renewable energy sources. PV systems are attractive to many organizations and individuals as they can be designed relatively easily, in a wide range of sizes and to fit in many different locations.”
Utilities in Germany lead in the use of PV resources, with 75 percent of the German utilities surveyed using PV as part of their energy resource portfolio. An additional 15 percent of utilities are adding PV to their portfolio within five years. This shows the decade effort by the government to support renewable energy.
six months of supply to less than 80 days. However, the forecast this year reveals a more challenging “W”-shaped pattern.
“PV channel inventory piled up during the end of the first quarter of 2010—a pattern that will occur again in the third quarter, although to a lesser extent,” Wicht said. Inventory, meanwhile, fell in the second quarter in light of the summer German FIT cuts as well as price drops adopted by installers to preserve market volume during this time of the year, he added.
“Inventory management of the channel presents major challenges in the PV industry,” Wicht said. “Unlike the mature supply chain of the electronics space, where the bulk of inventory is held by upstream suppliers such as semiconductor makers, most PV inventory piles up in the later stages of market flow, ending up among sites and installers. This contributes to bloat and inefficient operations.”
www.solar-pv-management.com Issue VI 2010
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