Weak demand in key markets in early 2011 - due to reductions in, and confusion over incentive levels - has led PV module prices to fall quickly. Similar to how the market responded during the period of weak demand in 2009, price declines have further impacted demand by causing some customers to postpone projects, with the aim of securing modules at a lower price at a later date. However, developments in the first half of 2011 have placed the market in a perfect position for a strong second half recovery - the most significant development being that low installations in Germany indicate that a mid-year feed-in-tariff (FiT) reduction is now unlikely.
“As predicted, module prices have fallen incredibly quickly in the first half of 2011,” commented Sam Wilkinson, senior PV market analyst at IMS Research. “After two years of solid growth, demand has softened and PV modules are being priced highly competitively as a result. We’ve seen modules from recognised brands being offered for less than $1.45/W (~€1.02). Such considerable reductions in prices, combined with no mid-year feed-in- tariff reduction in Germany, will make investment in PV attractive again, and IMS Research predicts that this will reignite the German market from Q3’11”.
IMS Research forecasts that PV module shipments will grow sequentially by an average of 30% in the third and fourth quarter, stimulated by strong demand from Germany and other fast-growing markets. Full year PV module shipments are forecast to reach over 23 GW.
According to IMS Research, strong growth of PV module shipments will stabilise prices in the second half of the year, and will also help to deplete the record levels of channel inventory that has built up throughout the supply chain during the first half of 2011. Channel inventory levels are predicted to return to a more sustainable level (approximately equivalent of one quarter’s production) by the end of the year.
Detailed analysis of supply and demand dynamics in this market is available from IMS Research’s quarterly PV cell and module report.