China Drives Record Solar Growth Becoming Biggest Market – Bloomberg 03-08-12

Salient to Investors:

The average analyst expects new solar generation capacity to rise 14 percent in 2013 to 34.1 gigawatts, equal to 8 atomic reactors and versus 4.4 percent growth in 2012.

BNEF says China will pass Germany as the largest solar market in 2013 after doubling its 2013 target for new projects in January, and solar-industry expansion will also be driven by the US and Japan.

Jenny Chase at Bloomberg New Energy Finance said solar demand is very resilient and will keep growing in 2013 even as European markets slump, but increases in installations driven by record-low prices won’t help manufacturers’ margins much, and only further mass capacity shutdowns will stabilize prices of photovoltaic products.  Chase said demand has surprised on the upside in every one of the seven years she has been doing demand forecasts, though BNEF said growth can no longer rival the twofold expansion of 2007 to 2008 as the photovoltaic market matures.

IHS said non-European countries will expand their share further in 2013, while stagnant prices will cut annual revenue in the industry in 2013.

Tumbling prices are benefiting installers while hurting manufacturers. Aaron Chew at Maxim Group said higher shipments at no margin still leaves no margin, and solar suffers from a price elasticity paradox – lower pricing drives demand, so any uptick inversely impairs it. Chew said almost all the value of solar is captured in the downstream industry.

Deutsche Bank said surviving manufacturers may see signs of a recovery in 2013 on China’s decision to double installations, Warren Buffett’s investment in large solar projects, and more stable prices for polysilicon.

The global solar market is typically volatile. Past Bloomberg surveys show analysts underestimate installations.

Citigroup said companies with downstream operations such as project development will gain most from accelerating growth, while Asian stocks will profit from the surge in local demand.

BNEF said prices for polysilicon – the raw material for most solar panels – will recover to $20 to $25 this year.

Read the full article at http://www.bloomberg.com/news/2013-03-08/china-drives-record-solar-growth-becoming-biggest-market.html

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