Mixed forecasts for solar, prices to fall 8%

Photovoltaic (PV) module shipments are expected to slow, starting in the fourth quarter of 2010, and decline close to ten percent quarter-on-quarter in the first quarter of 2011, according to IMS Research (Wellingborough, UK). The market research firm also expects PV module prices to decline by eight percent in the first quarter of 2011.

IMS’s latest report indicates the first quarter of 2011 will be very different from the first quarter of 2010 when speculation of additional cuts to incentive schemes drove unusually high demand in Europe, whichresulted in production capacity expansions across the globe.

“We predict the return of classic seasonal installation patterns and forecast that completed installations will decrease by nearly 40 percent in the first quarter of 2011 versus the fourth quarter of 2010,” said Sam Wilkinson, IMS research analyst, in a statement. “This fall in demand for installations after December 31, 2010, combined with huge capacity expansions certainly poses some problems for the market. We predict a sharp slowdown in module shipments from the fourth quarter of 2010 and PV module prices are forecast to decline once again during the first half of 2011,” he added.

After declining by an average of 10 percent each quarter in 2009, high demand resulted in small price decreases from the fourth quarter of 2009 to the first quarter of 2010, said IMS. Factory-gate prices of crystalline modules fell 2 percent in Euros between the two quarters, despite the German FIT reduction of 9 to 11 percent as planned at the end of the year.

In the second quarter of 2010, average crystalline module prices increased by about one percent in Euros over the previous quarter, but by the end of the year, prices are forecast to fall just one percent from their levels in the final quarter of 2009, according to IMS.

Similarly, SolarBuzz (London, UK) reports that the European solar PV market in the first half of 2010 was dominated by the impending mid-year incentive tariff reductions in Germany and lower module pricing that emerged throughout 2009.

“Despite the strength of end-market demand, which was one-third higher in Germany in the first half of 2010 than in the second half of 2009, the first PV module price increases of 2010 only emerged in June, said Alan Turner, vice president of European Market Research for Solarbuzz, in a statement. “Even then, the increases in euro terms only partially compensated for the deteriorating price picture in dollar terms caused by the euro’s dramatic decline against the dollar. Such is the strength of supply growth in the PV industry.”

SolarBuzz’s report, “Europe PV Markets 2010,” indicates that the German PV market reached 3.87 gigawatts (GW), growing 109 percent in 2009. The report also finds that growth would have been larger if there wasn’t a shortage of inverters, which has slowed market growth since September 2009.

SolarBuzz: 2009 Europe PV Market Size by Country (MW)

Growth of the total European market was 16 percent in 2009. However, if Spain is excluded the growth rate jumps 126 percent, according to SolarBuzz.

SolarBuzz believes the fundamental problem in the solar market is the continued dependence of the industry on market incentives.

In the U.S., the solar market grew 36 percent in 2009, compared to a 62 percent growth rate in 2008, reports SolarBuzz. On a global scale, the country was ranked the third largest solar photovoltaic market, behind Germany and Italy.

“2009 marked a year of transformation for the U.S. solar market,” said Craig Stevens, president of Solarbuzz, in a statement. “Changes in the roles of utility companies, new market entrants, lower cost PV modules from Asia and new direct-to-market approaches became more prevalent. As a result, solar companies doing business in the States will need to adapt quickly to these challenges while also being responsive to frequent adjustments in the fragmented incentive and regulatory environment.”

SolarBuzz’s report, “United States PV Market 2010,” finds that California continues to play a critical role as a leader in the U.S. solar market. The state accounted for 53 percent of U.S. PV on-grid installations, and is expected to maintain its strong position in 2010.

Although utility barriers need to be resolved, including regulatory restrictions on the use of Power Purchase Agreements (PPAs), sixteen states and Washington D.C. have enacted a Renewable Portfolio Standard with solar or DG set-asides to promote PV, according to SolarBuzz. Fulfillment of solar set-aside obligations generated about 30 percent of total on-grid PV installations in 2009, according to the report.

Solarbuzz forecasts the U.S. solar market to grow to between 4.5 to 5.5 GW by 2014. This is around ten times the size of the 2009 market, with an average annual growth rate of 30 percent annually.

The key growth drivers include more aggressive positioning in the utility segment based on the need to meet Renewable Portfolio Standard obligations, the development of new state markets together with the return of the corporate segment and steady growth in residential demand stimulated by cuts in end-market pricing.

The U.S. order book for photovoltaic systems currently stands at 12 GW, based the total of solar RPS set-aside, projections of demand from multi-year funded incentive programs, stimulus funded projects and other large utility identified projects, according to SolarBuzz.

Tags: Demand, Europe, IMS Research, Pricing, PV Modules, Shipments, Solar Module Market, Solar Modules, SolarBuzz, U.S.

This entry was posted on Friday, July 23rd, 2010 at 2:16 pm and is filed under Renewable Energy. You can follow any responses to this entry through the RSS 2.0 feed.