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View Diary: China doubles its installed solar electricity to 7 gigawatts. Will add 10 gigawatts in 2013 (81 comments)

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  •  China will have fewer panels to export b/c.. (2+ / 0-)
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    Kickemout, KenBee

    ... demand has evaporated.


    More Clouds Gather Over Solar-Power Producers


    An early bear on the industry thinks the forecast is even worse now than it was prior to 2011's heat stroke for the stocks.

     We've seen estimates for the global supply of solar panels at upward of 100 million gigawatts (that is, billions of watts). What's your forecast for supply and demand?

    In China alone we think there was over 40 gigawatts of production capacity at year-end 2012, while aggregate global demand was just about 24 gigawatts. We recently went through all 95 companies in our Chinese solar-supply model, to reflect recent announcements out of these companies, many with negative cash flow. Though some 30 companies left the business, China was adding roughly five gigawatts of capacity in 2012 and plans to add roughly two gigawatts in 2013. Capacity is not being rationalized in China.

    Why has demand decreased?  From the same Barrons piece...
    Johnson: The bearishness I feel now is the most pronounced since I've covered the stocks. The reason is simple. Since 2008 we've been calling for Armageddon, because supply massively exceeded demand. But in 2008 and every year through 2011, you had miracles in some end market.

    In 2008, Spain decided that they were going to end their solar subsidy. But they announced it ahead of time, and that caused a massive demand rally before the end of the year. In 2009, Germany decided they were going to cut their incentive and caused a spurt that made demand look much better than it actually was. It happened again in 2010, when Germany, the Czech Republic, France, and the U.K. all said that they were going to make incentive cuts. And again, in 2011, Italy announced it would make a Draconian cut in its incentive at the end of that year.

    Finally, in 2012, you actually had the cuts in the key European markets. Germany and Italy were roughly half of aggregate solar demand in 2011. In the third quarter of 2012, big incentive cuts took effect in those markets. In 2013 is you will have a full year of these incentive cuts impacting global solar demand.

    Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project.

    by PatriciaVa on Thu Jan 10, 2013 at 07:28:20 PM PST

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