JA Solar, JinkoSolar and LONGi Solar have come together to push for 182mm sized solar modules aiming for 54 GW cumulative capacity for these modules by the end of 2021. PV InfoLink expects overcapacity of cells and modules by the end of 2021 leading to price war for cells and modules. (Photo Credit: LONGi Solar)
- PV InfoLink expects end of 2021 to see PV market flooded with solar cells and modules as big manufacturers continue their expansion drive
- With the resultant price downgrade due to overcapacity, these big companies are expected to threaten business of tier-2 players
- Analysts believe manufacturers will need to either replace or eliminate older production lines for products of smaller formats in the first half of next year
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With tier I solar PV cell and module manufacturers announcing massive capacity expansion to be realized by the end of 2021, analysts at PV InfoLink expect the market to be flooded with these products next year which would eventually lower prices and result in ‘triggering price war’.
According to PV InfoLink’s estimates, new module capacity expansion by the top 10 vertically integrated companies will represent 78% of the expected 70 GW to come online in 2020. These deep-pocketed companies are also eating up market share of tier-2 manufacturers, threatening their business.
By the end of 2021, total cell and module capacity is forecast to add up to 366 GW and 377 GW, respectively. However, it would be more than double the forecast demand of 143.7 GW PV InfoLink analysts expect for next year (see PV InfoLink Expects 143.7 GW Global Module Demand In 2021). This automatically will push down prices lowering these for M6 sized cells by 13% to an estimated RMB 0.76 to RMB 0.78 per W, that for modules 6% to RMB 1.47 to RMB 1.48 per W by the end of June 2021, compared to the current level.
“With both older production lines as well as new production lines existing in the supply chain, overcapacity will become even more prominent,” stresses PV InfoLink. “This means that manufacturers will need to replace or eliminate older production lines for products of smaller formats in the first half of next year.”
This news comes at a time, when installers are suffering from module supply shortages, while module makers have to deal with decreasing margins as processing materials, such as glass are on short supply and available at higher prices. Canadian Solar, for example, just said in its quarter results that it expects gross margins to be impacted by the raw material shortage (see 20% Annual Revenue Growth For Canadian Solar In Q3/2020).
Regarding capacity expansion, 3 PV giants, JA Solar, JinkoSolar and LONGi recently announced together they aim to have 54 GW of cumulative production capacity of 182mm sized solar modules alone by the end of 2021 (see 3 PV Giants Unite To Push 182mm Cell Based Modules). All 3 will present on the first day (Dec. 1, 14-17:00 CET) of the upcoming TaiyangNews High Efficiency Solar Conference with the focus on “PERC Modules with M10/182 mm Cells Towards Very High Efficiency Products.” (Free registration here).
PV InfoLink analysts have made similar observations for wafer overcapacity.