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Why are Utilization Rates in the PV Industry Still Misunderstood?

The PV industry has had a difficult time understanding utilization rates. Defining them has been challenging enough; calculating them an altogether different story. The resulting metrics have been used rather liberally, sometimes giving a misleading picture of what is really happening in manufacturing fabs.

Utilization is really ‘capacity-conversion’; more specifically, it is ‘effective-capacity-conversion’. Effective capacity conversion (ECC) can be understood in the following way: at any given time, ECC looks at the real/effective capacity that could be turned on and used today, to meet current market demand. It does not include capacity mothballed, or permanently idled, or capacity that is based on equipment nameplate specs and has never produced a panel that anyone would want to buy.

Therefore, ECC is the amount of production that is provided from market-ready capacity along the value chain. This calculation is different for poly, ingot, wafer, cell, module and thin-film variants. The ECC calculation differentiates what is produced from what is shipped, two very different things in the PV world.

The confusion does not end there however, as company-specific definitions need to be factored in. For example, PV manufacturers often cite utilization rates defining capacity as what they know is available to them. But at the same time, they cite their nameplate capacity levels as what ‘could’ be available to them, even though some of the lines have been retired or some are only being used in R&D mode. This skews production data calculations, and is often used to hide outsourcing and rebranding that may damage marketing efforts in the field.

In the past, it may not have been that important to check these issues within the PV industry. Today, if utilization rates are to be used, then it is essential to define how they are calculated. Indeed, the more detail that is offered, the more useful the metrics can be.

For example, ECC rates for mono and multi-based c-Si fabs are very different. And depending on the producer (and which countries and PV segments they are selling into), these can vary greatly. Some PV fabs cannot make enough standard multi cells/modules today, and some are changing from multi to mono capacity, because they are growing market share in countries that can’t get enough high-efficiency mono panels. Therefore, even combining multi and mono can mask some really important trends in the industry today.

The figure shows one specific type of ECC, where cell/thin-film capacity is analyzed across the different tiers. The dip in capacity for each of the tiers during 2012 and 2013 can be seen clearly, as can the gradual shift to a tier 1/tier 2 only breakdown by 2015.

Midstream Cell Module ECC Rates

Source: Adapted from NPD Solarbuzz PV Equipment Quarterly

Once capacity is fully understood and explained, there is no shortage of comparable graphics that can allow specific supply and value-chains to understand current and future operating metrics from the PV industry as a whole.