Solar Capital Spending Enters 2014 with Strong Momentum

Latin America Leads Manufacturing Capacity Growth

El Segundo, Calif. (March 24, 2014)—With capital expenditures for the photovoltaic (PV) industry set to bounce back in 2014, a new round of solar spending will commence that will reach $3.8 billion by year-end, according to IHS Technology (NYSE: IHS).

PV capital spending has been rising notably over the past two quarters, en route to a third straight increase with the trend clearly continuing into the first quarter this year. Global PV capital spending is expected to rise by 45 percent in 2014 from $2.7 billion in 2013.

"Since August of last year, IHS has observed strong signs that a new capital spending cycle would start in 2014," said Jon Campos, solar analyst at IHS. "Key factors such as market sentiment, PV demand and equipment-supplier bookings have continued to progress as a result of a healthy level of optimism."

Most Tier 1 PV manufacturers now are fully utilizing, expanding and planning to increase manufacturing capacity, Campos said, with an extra emphasis on expanding their presence in emerging markets. Capital expenditures are expected to climb considerably in 2014 and 2015, with Latin America leading the way.

Latin America this year will lead all regions in manufacturing capacity growth for solar panels with an expansion rate of 35 percent, slightly down from 42 percent in 2013, when it was also the global leader. Latin America is ahead of the Middle East-Africa market with 33 percent, as well as third-placed North America with 13 percent, as shown in the attached figure.

Next year, solar manufacturing capacity in Latin America will boast even higher growth at an outsized 147 percent, with the region continuing to lead in 2016 and 2017.

These findings are taken from the report, PV Manufacturing & Capital Spending Tool - Q1 '14, from the Power & Energy service of IHS.

Investors and PV supply chain announce further expansions in two regions

Earlier this year, Chinese manufacturer Hanergy released a statement unveiling plans to build a $500 million thin-film PV factory at an undisclosed location in the Ivory Coast of Africa. Fellow Chinese maker JA Solar has also executed a joint venture with Powerway PV, another Chinese-based PV player, for a 150-megawatt (MW) plant that is scheduled to begin commercial production in South Africa.

Meanwhile, Nigeria's first module manufacturing plant has been completed and is now operational. The plant, in Sokoto, has been built by German firm JVG Thoma and will produce the company's Desert range of modules, which have been designed to operate in extreme conditions. First announced last summer, the plant was part financed by the World Bank and will have a 10-MW nameplate capacity. Comparable-sized manufacturing lines have also come online in Algeria in the last quarter.

In Latin America, Brazilian solar company Solar-Par Participações aims to build a vertically integrated solar module production facility in Teófilo Otoni, in the southeastern Brazilian state of Espírito Santo.

The factory, which would produce ingots to modules using an unspecified technology, requires an investment of $103 million, and will have an annual capacity of 95 MW. The company plans to immediately submit its project proposal to environmental authorities, and it hopes to begin production at the facility in early 2015. Solar-Par intends to eventually establish a research and development center at the facility as well, which will necessitate an additional investment of $5 million.

New features

The IHS PV Manufacturing & Capital Spending Tool now includes data and analysis on manufacturing technologies by major company as well as book-to-bill ratios. In its latest quarterly report, IHS states that order activity for major equipment suppliers has been trending upward for the past two quarters and is forecast to continue doing so for another two quarters until at least the second quarter of 2014.

The book-to-bill ratio will reach 1.14 by then, IHS estimates, and a change in backlog of 23 percent will take place before the ratio settles at approximately 0.97 by the time the year closes out. With announcements regarding large-scale capacity expansions scheduled to come online between late 2014 and mid-2015, IHS is forecasting an assertive recovery of sales of PV manufacturing equipment in 2014.

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