Solar module manufacturers will continue to sell their oversupply of inventory at tight margins until 2013 when increased demand from Asia will alleviate some of the market pressures on the industry, according to a report from Lux Research.
Lux released its report on the top 10 solar panel module manufactures this month and revealed that the top 10 manufacturers, most of whom are located in Asia, produced 12.5 gigawatts of solar—44 percent of the world supply.
“A lot of the top 10 manufacturers are running below capacity,” said Fatima Toor, the Lux research analyst who authored the report.
Many of them have plants in different locations around the world and have slowed production in the parts of the world where it’s most expensive to produce the panels, like the United States and Europe.
“They’re still running at full capacity in the less expensive locations like Asia to maintain cost reduction in production,” Toor said.
Most of the top 10 geared up quickly and were prepared to supply the world with solar before the demand was high enough to support all of it.
“There’s an extreme oversupply and these companies are selling at almost negative margins to burn through their inventory,” Toor said.
While that paints a grim picture for the industry, Lux forecasts, which project to 2016, don’t predict that trend to continue beyond 2013.
While demand is falling in Europe, and it’s hard to predict what will happen to demand in the United States, Lux forecasts exponential growth in demand from the Asian markets. Japan, for instance, has plans to dramatically increase solar adoption.
The country’s leaders used to argue against the technology, saying it was too intermittent, Toor said.
“But the damage Fukushima did was enormous,” Toor said.
That nuclear disaster following the earthquake and tsunami a year ago forced Japan to reconsider its energy sources. And solar emerged as a frontrunner.
In addition to an interest in adopting solar technology, the country and some of its Asian neighbors are working to grow as manufacturing leaders as well. Sharp, a Japanese company and Hanwha of South Korea are both in the top 10 manufacturers.
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