LOS ANGELES (Reuters) - Spending on equipment to make photovoltaic solar products will collapse next year following aggressive capacity expansions in 2010 and 2011 that have created an oversupply of panels in the market, according to a report by research firm Solarbuzz.
Equipment spending for crystalline silicon and thin-film products will slide 47 percent to $7.6 billion in 2012 from $14.2 billion this year, the report said.
Photovoltaic solar panels turn sunlight directly into electricity. The key raw material in most PV panels is crystalline silcon, though some manufacturers use other materials. Those are collectively known as “thin film.”
In 2010 and the first half of 2011, ambitious capacity expansions by minor solar manufacturers helped boost equipment revenue growth rates to 84 percent and 33 percent, respectively, Solarbuzz said.
“Strong double-digit bookings and revenue growth through 2010 created a misleading picture for PV equipment suppliers,” Solarbuzz analyst Finlay Colville said in a statement. “An artificial peak in equipment spending was created during 2010 and 2011, providing a short-term pull on equipment that was out-of-sync with the long-term requirements of the industry.”
The combined manufacturing capacity of market-leading companies will be sufficient to meet worldwide demand this year and next, resulting in a major shakeout among solar cell manufacturers from 2012 to 2014.
Equipment spending by minor solar players is expected to fall 60 percent in 2012. By 2015, solar market leaders are forecast to account for more than 70 percent of all photovoltaic equipment spending.
Equipment suppliers to the silicon cell and module industries will be hit hardest, Solarbuzz said.
Companies with strong market shares, such as GT Solar International Inc, Meyer Burger, Applied Materials Inc, and Jinggong, have been “sheltered” from the decline in equipment bookings in the first half of this year, the firm said.
Solar stocks were broadly lower on Monday, with GT Solar’s shares down 4.6 percent at $15.75, Hanwha Solarone down 5.1 percent at $5.60, JA Solar Holdings Co Ltd down 4.7 percent at $4.68, First Solar down 3.9 percent at $127.40, Yingli Green Energy down 3.9 percent at $7.61, and Trina Solar down 3.4 percent at $19.81.
Reporting by Nichola Groom