During the first half of 2017, solar panel manufacturers announced near record amounts of new or upgraded production capacity. This new capacity, while almost 70% in China, is spread worldwide and focuses on the newest hardware trends in the industry pushing solar panel efficiency higher.
For comparison’s sake as the global numbers here are *very* large. The USA installed 14.6GW of solar power in its record-breaking 2016. The world installed 74GW last year. 2017 estimates are of 100GW installed (48GW+ in China). The world’s largest solar plants are around 1-2GW these days. And – an above average sized residential installation is 0.00001GW (10kW).
In the first and second quarter of 2017 – greater than 52GW of solar manufacturing hardware announcements were made. The volume represents to biggest mass of announcements in any first half of the year for the solar industry. The single largest two quarters in a row – at 57GW – were fourth quarter 2015 headed into the first quarter of 2016. It is expected that the second quarter numbers will be revised upward as more news is collected. The first quarter numbers were initially released around 17GW, and later revised upward to greater than 24GW. A relatively small, compared to the 40% of Q1, upward revisement of ~14% would make this largest first half, also the largest consecutive quarters we’ve ever had.
China led the globe in new announcements – by far. Of the 52.7GW, China’s share was 36.7GW – greater than 69% of the total – as well, a large chunk of this new capacity was based in southeast Asia and probably is part of China’s investment capital. In total 14 countries made expansion announcements.
Of course, it was the largest companies in the solar manufacturing world – JinkoSolar, Trina Solar, Canadian Solar, JA Solar, Hanwha Q CELLS, LONGi, First Solar and GCL – that led the announcements.
The second best part of this report, after the large quantity of course, is that the new manufacturing hardware being produced is focused on – high-efficiency upgrades such as P-type multi PERC, P-type mono PERC, N-type mono heterojunction and bifacial cells. An article from early in the year, which I love highlighting at it stated then that a ‘solar technology buy cycle (is) under way‘, pointed out the confidence (the manufacturer) had in a series of major new orders for high-efficiency n-type PERC and n-type bi-facial cell equipment.
Four key data interpretation points:
First, this 52GW is composed of both new and upgraded capacity. I’ve recently read that we have about 120-140GW of global solar manufacturing capacity – while this number has definitely increased total capacity, it is not a pure increase. Interestingly, with an increase in solar panel efficiency – moving a production line from say 16% efficient to 19% – you actually have almost the same machines, the same factory, the same employees, etc increasing their production efficiency by 18%. So, even if we are ‘only’ upgrading a machine within a manufacturing line instead of building a brand new facility – we are still increasing its capacity. That’s going to help bottom lines.
Second – these announcements contain a mix of the solar panel manufacturing process. Solar cells and panel assembly make up the majority of the announcements. About 14GW of the announcements were assembly, 38GW for new solar cells and 5GW of both on the same site. Really, our total global capacity to create a final product increased somewhere between 14-38GW.
Third – that the new announcements were focused with PERC/heterojunction/bifacial solar cells is of no surprise to readers of the EGEB. We’ve been watching these announcements every morning from around the globe. I am already seeing these higher efficiency products showing up in my customer’s bills of material.
Last – These announcements, while made in the first half of 2017, will take a couple of years to fully roll out. Reading about companies that manufacture the hardware for these solar panel companies – Meyer Burger and Amtech are the two I follow, I hear about them having a book of business filled out through the end of 2017 and well into 2018. I’ve read about the Tesla-Panasonic solar panel Gigafactory having challenges scaling because the manufacturing equipment was taking its time.
What we can say absolutely did occur in the first half, is that banks, CFOs, CPA, investors, manufacturers and engineers all signed off on plans totaling many billions of dollars to grow the solar industry. These very conservative with cash groups believe that a 10-32% global capacity expansion in this year’s first half makes financial sense. Being as how we’re expecting installation volume to grow 35% from 74GW in 2016 to 100GW in 2017, I think these smart people are onto something.
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