ABSTRACT
PV started in 2001 with increasing big demand. Insufficient amount of products were available due to the Poly-Si shortage until 2007, which started to push prices and profit up (Annex. 8). What happened was that because of the expectation of continued growth, all of the PV cell and module manufacturers embarked on an expansion of manufacturing operation and several new manufacturers entered because of the great demand. When Poly-Si became available again, the resulting expansion of the production capacity for c-Si and also for the thin-film PV modules was tremendous. The automatic c-Si cell and module as well as for thin-film PV module turnkey mass production lines were available from several equipment manufacturers. As companies were able to raise large amounts of money issuing stocks, bonds, or taking loans, they could easily increase their PV cell and module production capacity and as a result practically overnight every manufacturer winded up with “overcapacity.” This resulted in a price war pushing prices lower and as a global recession and some changes in the FiT laws in various countries took place a slackening in the demand which happened to cause a large increase in the inventory. It was described before the PV module prices started a nosedive in 2007. That year, the price was about $3.50/Wp and wound up around $1.09 in 2011. In 2012, the global PV production was about 30,000 MW. During the second quarter of 2012, the price of a Wp went down to $0.98 and in the fourth quarter it was only $0.80. The results of these price reductions were manifold.It obviously increased the demand for PV systems but caused financial losses to PV manufacturers, and as a result, some case PV manufacturers wound up in a bad financial situation. The world’s financial crisis also affected banks and their capability to provide loans to these companies. Some of the PV companies closed, went bankrupt, or were sold.Cyclical “overcapacity” and large inventory is a normal event in most industries and it is not a new phenomenon in the PV business either.The building industry is one example. The cycle starts with the need for building space for offices and/or housing. People start to build, and the buildings are rented or sold
fast. Builders see the opportunity to build and banks see the opportunity to lend money. This goes on for years and more and more companies or people and banks see the opportunity and get in. Price for space goes up, up, up, people or companies speculating that rental or space prices will continue to rise and build more and more, but at some point something happens and the need for space and housing decreases. Builders have overcapacity and inventory and as the result of lower demand, prices start to fall. Many builders and people who speculated in rising prices wind up with unsalable inventory and go bankrupt. This happened many times. For example in 1976, when the landlord, who owned the building in which Solarex rented only half of it, was not able to rent the second half and was not able to sell the building either, gave an offer to Solarex to take over the entire building and he would sell it to Solarex at a very low price. This was the bottom of the cycle. Solarex needed space and acquired the building in 1979. Four years later in 1983 Solarex outgrew the building and built a new factory, the building cycle started to go up and Solarex sold the building which was acquired in 1979 with profit without any problem.The last time the US building cycle was on top was in 2007/2008, when it suddenly collapsed which everybody remembers. This rollercoaster cycle in the building industry is about 5-7 years up and 5-7 years down. The US building cycle was in early 2012 at the lowest point and now it is starting to go up and house prices are slowly rising and some builders venture to build. The automobile industry is also cyclical: Even the mighty General Motors had to be rescued from total bankruptcy in 2009.What is happening now in PV is normal. The German FiT caused everybody to jump in to produce Si, wafers, solar cells, modules, and manufacturing equipment. This cycle peaked in 2011. Changes in FiT and recession, problems with banks and so on changed the landscape. Some of the companies will disappear, but many of the present ones will survive and the up-cycle started.PV for several reasons is not stoppable anymore. The mass production achieved the low prices that were needed to be
competitive. PV provides electricity during the day when most is needed. Because it is of a decentralized nature, it can be used anywhere and will fit into the new wireless environment. But there is one more reason it is unstoppable. It created many jobs and more jobs will be created as time goes on. The German Government realized that and nothing can be done to abolish PV. Many papers published in magazines are forecasting doom for PV. But they are all wrong. This rollercoaster for any industry is a normal event. Those forecasting doom for PV are all newcomers. We old timers have seen this rollercoaster effect before, but PV was never as unstoppable as it is now. We are now at the beginning of an upswing. In a few years, the upswing will peak again, but during the upswing PV manufacturers who want to survive the next downhill ride have to learn two words: “smart diversification.”
