[June 5, 2012: After I obtained the slides directly from Bloomberg New Energy Finance, they requested I pull them from the post. I have substituted lower quality photos I made at the time of the presentation at SNEC in Shanghai, China, to a public audience.]

[June 11, 2012: Bloomberg lawyer called today about the slides now photos. Seems wrong to be on the other side of a copyright complaint so I have removed all the photos except those with Ms. Chase even though I have not yet received a formal written communication or take down notice. By the BNEF response, I do wonder if the work represents the iceberg below the water instead of the tip? Ironic the presentation was made in China.]

[June 19, 2012: On the advice of an intellectual property attorney, I cut out the slide from the second remaining photo although I could have fuzzed out the numbers.]

BNEF provided a PV Market update at SNEC.
31 GW nominal Global PV Forecast for 2012.

From Bloomberg New Energy Finance PV Market Outlook Q2 2012 at SNEC

On the afternoon before the US Department of Commerce’s preliminary determination of Crystalline Silicon Photovoltaic Cells dumping, Ms. Jenny Chase, Head of Solar Analysis, Bloomberg New Energy Finance (BNEF), presented “Demand, Supply and Price; the Global View on Solar Developments in 2012” to a packed function room at the SNEC 6th (2012) International Solar Industry and Photovoltaic Exhibition & Conference (SNEC PV POWER EXPO 2012).

The BNEF Global PV Demand Forecast for 2012 to 2014 was presented using both Conservative and Optimistic Scenarios to bound the likely outcomes as shown in the charts. By the numbers, the 2012 Global PV Demand Forecast ranges from a conservative 26.3 GW (GigaWatt) to the optimistic 34.7 GW. When asked later, Ms. Chase said the best 2012 PV market estimate would be about 31 GW between the two extremes.

From Bloomberg New Energy Finance PV Market Outlook Q2 2012 at SNEC

Besides China, the US, Japan, and India, BNEF highlighted Latin America, Thailand, and, in eastern and southeastern Europe, the Ukraine, Bulgaria and Romania as rapid growth solar markets in 2012. In the optimistic case, the 2012 PV market in Germany is flat with 2011 and expected to decline significantly in either 2013 scenario. As 2013 PV demand in Germany, Italy, and the European Union (EU) are forecast to decline, there is a higher risk of a 2013 global PV market contraction if “Rest of World” demand doesn’t compensate per my reading of the charts. China is set to eclipse Germany as the largest single PV market by 2013. In 2014, PV demand might once again return to double digit growth rates depending on Rest of World adoption.

Optimistic Scenario slide censored
The “Global PV Demand, 2007-2011 and Forecast, Optimistic Scenario” slide top line forecast for 2013 is 35.2 GW and for 2014 is 49.6 GW.

With concerns about the high costs of Feed-in Tariffs across Europe, Italy stands out with the highest annual Feed-in Tariff (FiT) cost as a percentage share of GDP (Gross Domestic Product) at 0.30% to 0.40% percent albeit for an almost 6% PV share of overall electricity consumption. Ms. Chase said Italy was “flashing red” and might be the next Spain or Czech Republic with retroactive FiT cuts a real possibility.

From Bloomberg New Energy Finance PV Market Outlook Q2 2012 at SNEC

Meanwhile in Germany, PV system prices have come down in response to the FiT degression as shown in the below slide. For the first time in Q1 2012, a 30 to 100 kW (kiloWatt) sized PV system costing on average €2.00 per Watt ($2.50 per Watt at current exchange rates) installed will be compensated by a Feed-in Tariff less than the applicable market electricity price! PV systems have gotten so cheap the highest investment returns are now generated by kiloWatt-hour (kWh) self consumption. This is better than net metering since the effective feed in price equals the electricity price in that case, and any excess electricity production is still compensated at the FiT rate.

From Bloomberg New Energy Finance PV Market Outlook Q2 2012 at SNEC

Supply
On the PV supply side, BNEF estimates combined crystalline silicon and thin film module production across technologies of about 35 GW (GigaWatt), 40 GW, and 45 GW in 2012, 2013, and 2014 respectively. Reconciling these estimates with the BNEF PV Demand Forecast, 2014 is the first year the optimistic demand scenario could exceed annual module production. PV industry consolidation has a long way to go.

Per the “Supply Curve for Polysilicon by Commissioned Capacity as of April 2012” slide, 177000 to 225000 metric tons of polysilicon should be sufficient to meet 2012 conservative and optimistic demand scenarios respectively for crystalline silicon modules based on 6.25 grams per Watt and about 2.5 GW of thin film module supply. A ten (10) company oligarchy of polysilicon market incumbents and variable production cost leaders can supply all of the solar and 28000 metric tons of semiconductor polysilicon demand in 2012.

From Bloomberg New Energy Finance PV Market Outlook Q2 2012 at SNEC

Although ReneSola, LDK, and the “Long tail of other companies” are conceptually left in the cold, long-term polysilicon supply contracts provide some near term protection. However, long-term polysilicon contracts priced above $30 to $35 per kilogram (kg) will be subject to renegotiation with polysilicon spot prices already below $25 per kg. On May 29, 2012, “Polysilicon Prices Rise for First Time Since February” by Ehren Goossens for Bloomberg said:

The price of polysilicon, the raw material used to make most solar panels, rose 1.3 percent last week, the first increase since February, according to Bloomberg New Energy Finance.

 

The material’s average spot price was $23.20 a kilogram compared with $22.90 a week earlier, a survey by the London- based research group showed today.

Price
The “Chinese Multicrystalline Silicon Module Price Build-Up, May 2012 ($/W)” slide speaks for itself. Derived by BNEF from “SEC filings of quoted companies, publically available reports, various discussions and analyst estimates”, solar ingot, wafer, and cell manufacturing are negative margin operations even if best in class. [Ed. Note: the original May 2012 slide used a module spot price of $0.85/Watt]

From Bloomberg New Energy Finance PV Market Outlook Q2 2012 at SNEC

From Bloomberg New Energy Finance PV Market Outlook Q2 2012 at SNEC

In the final conclusion, Ms. Chase said:

Negative margins are a reality until most of the industry is consolidated or shut down.

From Bloomberg New Energy Finance PV Market Outlook Q2 2012 at SNEC

First it was Chinese solar cells, then Chinese wind towers, and now the US “Department of Commerce has announced the preliminary determination in the countervailing duty (CVD) investigation of imports of steel wire garment hangers from Vietnam.”