A reaction to Rystad’s recent estimates on European solar module stockpile

From pv magazine Germany

A week ago, Rystad Energy corrected its previous statements about the inventory of Chinese module imports downwards by 60% and assumed 40 GW inventories in the EU at the end of 2023.

Quote: “The market has reacted and companies have significantly reduced their orders,” said a Rystad analyst in an article published by pv magazine on September 29. Relying on export data for modules from China to Europe, he said that inventory levels are stagnating at around 40 GW. Manufacturers would not flood the European market without wholesalers and project developers placing corresponding orders, he also said.

This week, however, Rystad told pv magazine that there are suddenly 80 GW in the EU warehouses, and Rystad assumes that there could be 100 GW by the end of 2023.

Rystad said that the new numbers are based on new figures that have only been available this week, with the assumed decline having not occurred after all.

Bang! From 40 GW to 80 GW within six weeks because of supposedly new numbers.

And what happens next is no longer understandable to me.

From January 2023 to the end of August 2023, around 78 GW were exported from China to the EU. That's right – the official export figures from China are confirming this and it is no secret. The 78 GW probably also includes at least 5 GW to 6 GW of OEM modules that are sold under labels from “EU manufacturers” but come entirely from China.

Anyone can easily check this here for the last few years (csv file, scroll to EU):
https://ember-climate.org/data-catalogue/china-solar-pv-exports/

As I have already described several times, at the end of 2022, with an EU market of 46 GW, we had a “normal” inventory of two to three months, essentially around 8 GW, plus around 33 GW.

How to calculate “module surplus” with a simple Excel table

This is how the year 2023 began, and from here on, it is a simple Excel table with which you can calculate the “module surplus.”

In this table, you will note the official export from China to the EU with a delay of around two months, the EU market development up to the point in time under consideration, and the “normal storage cycle” of two to three months until the modules then appear in the installation statistics.

Based on my long solar experience, these are normal numbers on the way from the port to the customer and the completed installation or its official registration.

With an EU market of 60 GW to 114 GW expected for 2023, 10 GW to 19 GW would be the expected new normal for module inventories.

It's just a different dimension than before, and you have to get used to 10 GW to 19 GW as a “normal” warehouse flow – until recently, the entire EU market was that big per year. But now, it is 20 times larger than it was in the darkest days of the anti-dumping duties.

I'm surprised at how the analysts at Rystad Energy are proceeding. It has been easy all year long to take the Chinese export data, add “normal” warehouse flow, and then follow the EU installations closely. There was “no new data overnight,” only the export data from August of 8 GW, after 7.2 GW in July, and 11.6 GW in May. This doesn't look like a surprise to me.

In Germany, PV capacity is growing considerably, as reported every month by the Federal Network Agency. And in Germany alone, the market is growing by an incredible 85% compared to 2022, and I hear similar things from many other countries. Therefore, EU growth from 46 GW in 2022 to well over 80 GW in 2023 is entirely possible.

I don't know exactly where we stand with EU installations at the end of September. But it's very easy with Excel to enter 60 GW, 80 GW, and 114 GW as an EU market for the entire year 2023, scale it to the period up to the end of October using the rule of three, and calculate the export data plus warehousing against it.

The results for the EU warehouses can be estimated based on the end of October. By then, all of the exporters from August will have arrived here, meaning 78 GW since January. These are the results:

With a 60 GW market in the EU in 2023:
“Normal” inventory: 10 GW
Module consumption in 2023, up to and including October: 50 GW
“Excess” inventory, including excess from 2022: 59 GW

With an 80 GW market in the EU in 2023:
“Normal” inventory: 13 GW
Module consumption in 2023, up to and including October: 67 GW
“Excess” inventory, including excess from 2022: 39 GW

With a 114 gigawatt peak market in the EU in 2023:
“Normal” inventory: 19 GW
Module consumption in 2023, up to and including October: 95 GW
“Excess” inventory, including excess from 2022: 5 GW

I expect at least something quite simple like this from a large analyst firm like Rystad.

One could also say: “It's the real size of the EU installation market.”

Because that's what it's all about in the end: Have manufacturers, retailers, and others overestimated the EU market? Are there a lot of goods there? Or do they not have that, and in some cases, there is very little product?

In any case, it has nothing to do with “dumping” and you have to have strong special interests in order to derive accusations of dumping from the stocks. These would then apply in the same way to OEM modules imported from China, as well as to solar cells from China.

In the end, all the magnificent growth of the EU solar market is “brutally” good news for climate protection in the EU and the entire world.

Author: Karl-Heinz Remmers

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