In a TaiyangNews webinar on the impact of the coronavirus on the solar sector, the Chief Analyst of PV InfoLink Corrine Lin said a slowdown in the Chinese market and the reduced availability of multi-crystalline modules to India may impact total module demand for which the consultancy has brought down its overall global module demand guidance to 129.1 GW for 2020, from previously 134.3 GW. For 2021, it guides module demand to reach 138.2 GW. (Source: PV InfoLink)
- TaiyangNews webinar with global module demand and supply players finds participants witnessing no extreme visible impact of COVID-19 on the business as of now
- Factory utilization rates are steadily going up with top 10 module manufacturers using 80% of their capacity
- Module prices are expected again to go down in May as manufacturers raise utilization rates
- Module supply shortage has been hitting in particular India, which is looking for low-price multicystalline technology
- PV InfoLink has brought down its forecast for total module demand in 2020 factoring in Chinese demand, to 129.1 GW, compared to 134.3 GW it assumed previously
Global Solar Module Supply Chain Almost Restored, Coronavirus Likely To Impact Demand Side In Near Term, Claims PV InfoLink As Markets Outside China Battle It Out Next
(23. March 2020)
The COVID-19 impact is gradually manifesting itself in the solar power market supply chain as rumor has it that it threatens projects being stalled due to module supply shortage being felt across the globe. But if PV InfoLink’s estimates are any indication to go by, then the impacts are not very big and module supply shortage should ease by April 2020 or the latest by May 2020 and that’s when module prices are likely to come down again as factory utilization rates will be fully up again.
Chief Analyst of PV InfoLink Corrine Lin shared the consultancy’s overview of the situation during TaiyangNews webinar Coronavirus: Impact on Global Solar Market and Supply Chain held on March 10, 2020 giving reasons for this prediction. She believes after solar module manufacturers were forced to bring down their factory utilization rates in the month of February 2020 to an average of 40% to 70% due to labor shortage and logistical challenges, the situation seems to be getting better as Lin sees average factory utilization rates in March 2020 have gone up to 80% with top 10 module makers having increased to 84%.
According to Lin, the overall module demand was not affected much in Q1 as this is “the traditional low season in marketplaces outside of the U.S., Japan, and India.”
A country that was indeed effected in Q1 was India where there is no major local manufacturing industry and where demand for multi products is high but ‘marketplaces outside of India have not been impacted so far’. For that reason, India saw lower-than- expected installations in Q1, usually a very busy time in the country as this is the last quarter of its fiscal year. In consequence India “dragged down the overall global demand in the quarter. Marketplaces outside of India have not been impacted so far.”
Moreover, Lin said that China may be considering allowing the delay by a quarter for project installations (deadlines are March 31, June 30 and Dec. 31) taking into account COVID-19 impact. That’s why PV InfoLink sees Chinese demand in Q2-Q3 rather than in Q1.
Lin expects overseas demand to remain relatively stable throughout 2020, while Chinese demand will determine whether it’s high or low season in each quarter. “Overall, the global demand is expected to trend downward in Q1, but then bounce back in Q2 and reach the peak of the year in Q4,” said Lin
Nonetheless, PV InfoLink has brought down its forecast for total module demand in 2020 factoring in Chinese demand, to 129.1 GW, compared to 134.3 GW it assumed previously (see PV InfoLink Sees PV Market Growth Despite Coronavirus). The market intelligence firm has also provided module demand guidance for 2021, when it expects demand to reach 138.2 GW.
JinkoSolar’s Vice President Dany Qian claimed the company hasn’t felt the impact strongly as its factory utilization rates remain strong majorly because most of its fabs are located in less virus impacted regions and the highly automated procedures followed within the factories. It also had inventory to help it sail through the times. The company recently reiterated its module shipment guidance for 2020 to between 18 GW to 20 GW (see JinkoSolar Upward Revision Of 2019 Guidance).
According to Lin, components supply was difficult in China in February, ‘as numerous highways were blocked, making delivery hiccups the biggest issue for the domestic PV industry—especially for module makers, which face a chronic shortage of materials such as junction boxes, EVA, and aluminum frames in February.’
String inverter manufacturer GoodWe’s International Sales & Services Vice President Rong Shen said inverter companies were taken aback with the flare up of the virus impacting their access to components required for inverter manufacturing. However, things have stabilized now and GoodWee is expecting to increase production capacity by 20% over the next few weeks going by strong demand. For the entire year, the Chinese inverter maker says it should be able to ship 5 GW to 6 GW of total capacity reflecting an annual increase of 20% to 30%.
Representing the demand side during the webinar was COO of German solar IPP and international EPC player Enerparc, Stefan Müller who said things are fine as of now though there are some delays. On an optimistic note, he said if everyone is able to manage the challenges arising due to the virus the solar world can also witness a boom in the next 3 to 6 months. However, if things in Europe go the Italian way, where the virus has led to a shutdown of the entire public life, then it wouldn’t be possible to continue as planned from a logistical point of view as several construction sites are managed at the same time where tools, materials and teams are partly shared or moved around.
The impact of the coronavirus on prices was rather short, according to Lin. While mono prices are expected to stay stable until April, there is an uptick for multi, which is in high demand in particular in India. (Multi) modules—which generate limited profits and are hit by low utilization rates across the supply chain—are now running lower in supply than mono-Si modules and further outstripped by demand,” explained Lin. But she believes that module prices are likely to go down in May “as manufacturers raise utilization rates.”
Again, a wildcard on demand and prices, remains the world’s largest solar market China. “If China mandates tendered projects to commission by Dec. 30, PV demand will remain strong through the end of the year; however, if the commissioning deadline is postponed, demand will fall short of expectation in Q4, dragging down module prices,” said Lin.