No end to solar supply/demand imbalance


From pv magazine 05/2022

Overall, demand in the second quarter may be spurred by distributed generation and some utility-scale projects in China, while Europe’s strong module inventory draws amid the accelerated energy transition, and steady demand from the Asia-Pacific region. The US and India, on the other hand, is expected to see dwindling demand, owing respectively to anti-circumvention investigation and lofty BCD rates. Yet, demand from all regions together amass 52 GW, slightly higher than in the first quarter.

Under current pricing levels, China’s guaranteed installed capacity will drive inventory draws from utility-scale projects in the third and fourth quarter, while distributed generation projects will continue. Against this backdrop, the Chinese market will continue to consume large volumes of modules.

The outlook for the US market will remain obscured until results of the anti-circumvention investigation are unveiled at the end of August. Europe continues to see bullish demand, with no evident high or low seasons throughout the year.

Overall, demand in the second half of the year will surpass that in the first half. PV Infolink predicts a gradual increase over time, reaching a peak in the fourth quarter.

Polysilicon shortage

As shown in the graph (left), polysilicon supply has improved from last year and is likely to meet end-user demand. Yet, InfoLink predicts that polysilicon supply will remain short due to the following factors: Firstly, it will take about six months for new production lines to reach full capacity, meaning production is limited. Secondly, the time taken for new capacity to come online varies among manufacturers, with capacity growing slowly during first and second quarter, and then increasing markedly in the third and fourth quarter. Lastly, despite continued polysilicon production, Covid-19’s resurgence in China has disrupted supply, leaving it unable to meet demand from the wafer segment, which holds huge capacity.

Raw material and BOM price trends decide whether module prices will stay on the rise. Like polysilicon, it seems that EVA particle production volume can satisfy demand from the module sector this year, but equipment maintenance and the pandemic will lead to an imbalanced supply-demand relationship in the short term.

Supply chain prices are expected to stay elevated and will not decline until the end of the year, when new polysilicon production capacities come fully online. Next year, the entire supply chain may hopefully recover to a healthy state, allowing the long-stressed module makers and system suppliers to take a deep breath. Unfortunately, striking a balance between high prices and robust demand continues to be major topic of discussion throughout 2022.

About the author

Alan Tu is a research assistant at PV InfoLink. He focuses on national policies and demand analysis, supporting PV data compilation for each quarter and investigating regional market analysis. He is also involved in the research of prices and production capacity in the cell segment, reporting authentic market information. PV InfoLink is a provider of solar PV market intelligence focusing on the PV supply chain. The company offers accurate quotes, reliable PV market insights, and a global PV market supply/demand database. It also offers professional advice to help companies stay ahead of competition in the market.

The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.

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