Crashing PV module prices will turn into a boon in 2H11 for module shipments that have suffered on weak demand in key markets, according to analysis from IMS Research.

June 30, 2011 - Crashing PV module prices will turn into a boon in 2H11 for module shipments that have suffered on weak demand in key markets, according to analysis from IMS Research.

The dent to demand has been twofold, IMS explains: reductions and confusion surrounding incentives in key regions has undercut PV module prices, and customers are postponing projects hoping to secure modules at a later date.

However, these 1H11 developments will create "a perfect position for a second-half recovery," notes IMS' senior PV market analyst Sam Wilkinson. "After two years of solid growth, demand has softened and PV modules are being priced highly competitively as a result," he writes in a report. "We've seen modules from recognized brands being offered for less than $1.45/W (~?1.02)." These falling prices, combined with the fact that Germany probably won't enact a midyear reduction in its feed-in tariff (FiT) since installations have been so low, "will make investment in PV attractive again," and reignite the German market, he says.

IMS now forecasts PV module shipments to grow 30% in both 3Q11 and 4Q11, thanks to surging demand in Germany and other fast-growing markets. Full-year PV module shipments should exceed 23GW. This strong growth will stabilize prices in 2H11, and also help erase what have been record-high inventories built up during the first half of the year -- earlier reported as a 10GW stockpile, which sounds shocking except only really a quarter's worth of extra product sitting around above normal levels. Look for more normal channel inventories by year's end, back to about one quarter?s worth of production.