As solar PV incentive policies continue to be reduced and installed system prices decline, strong cyclic changes in quarterly demand will start to become a thing of the past for the PV industry.
In a policy-driven environment, policy adjustments often cause large surges in quarterly demand as customers and developers rush to secure incentives before they are reduced. Often, this can lead to a dramatic surge in end-market demand with the final calendar year quarter often becoming the ‘make or break’ quarter for annual shipment targets.
Indeed, the PV industry has followed this trend for the past few years, but this can result in problems for upstream manufacturers if year-end demand does not meet expected levels. Inventory built up over the first few quarters is then at risk of being surplus to demand at year end.
For downstream players, the dynamic has been somewhat different. Installers and developers typically try and delay new purchases until current inventories are depleted or prices have become more attractive.
In 2012, demand was more evenly distributed across the four quarters than seen in previous years. In fact, this caused some pain for manufacturers that were hoping for a final quarter repeat surge, but did allow manufacturers with contracted shipments to balance out quarterly production. And there is every possibility that these demand trends will be repeated in 2013 also.
However, the shift to more stable quarterly demand is largely a global phenomenon. At the country level, demand phasing can still vary dramatically. For example, fourth quarter 2011 demand in Germany accounted for 45 per cent of annual demand in 2011; in China, fourth quarter 2012 demand made up almost 60 per cent of China’s 2012 annual total.
As PV demand sees increasingly global contributions – and is driven more by project economics than by government policies – quarterly demand will resemble the phasing seen in 2012. This more stable demand profile will assist in stabilising manufacturing production levels, with a gradual shipment increase each quarter accounting for the overall annual PV demand growth levels.
As such, this would definitely represent a strong shift from the boom-and-bust patterns of the past and would be a step in the right direction ahead of supply-demand rationalisation.
Quarterly Contribution to Annual Demand 2008-2013
Source: Adapted from Solarbuzz Quarterly