Solar PV installation crown passes from Germany to Italy

December 13, 2011 | 0 Comments

After 2 years as the world's biggest solar photovoltaics (PV) installer, Germany is being deposed by Italy, says IHS iSuppli's PV Market Brief report. The total global solar PV new installations of 2011 reached 23.8GW, up 34% from 17.7GW in 2010.

December 13, 2011 -- After 2 years as the world's biggest solar photovoltaics (PV) installer, Germany is being deposed by Italy, says IHS iSuppli's PV Market Brief report. The total global solar PV new installations of 2011 reached 23.8GW, up 34% from 17.7GW in 2010.

Germany's 2011 PV installations will decline 20% year-over-year, ending with 5.9GW of new solar power. Italy, on the other hand, will nearly double its installation pace, coming out of 2011 with 6.9GW of new installs (see the table).

Germany's installation pipeline "stalled in the first half of 2011" with 1.7GW installed, and could not retain the top global spot even with a bump in installs (1.9GW) in Q4, said Dr. Henning Wicht, director and principal analyst for photovoltaics at IHS. Figures are provided by the German Grid Agency.

Italy also saw most of its PV installation growth in the latter half of 2011: 2GW in Q3 and Q4. The Italian government offered "attractive incentives" for PV installations, which spurred growth in the country, said Wicht.

The US took third place, with 2.7GW worth of installations in 2011.

China was fourth with 1.7GW.

Japan installed 1.3GW to claim top-5 ranking.

Back to Europe, France ranked 6th with approximately 1.0GW of new installations.

Also read: Global solar PV installs of 2011

Component prices in the solar supply chain -- wafers to modules -- are still falling. In Q3, for instance, large PV systems were being offered in Germany at 1.60 euros (about $2.13/W), down from 1.80 euros; with residential rooftop installations also declining to 1.90 euros, a reduction from 2.20 euros. Among less favorably positioned Tier 2 and Tier 3 suppliers in Germany, desperation selling had driven module prices to levels reaching 0.68 euros/W.

The weak demand in Europe will lead to further price battles in 2012, with overall module prices forecast to reach 0.65 euros ($0.80) in March 2012, IHS believes.

The primary field of contention will be module and polysilicon prices. Already, spot pricing for polysilicon has dropped below $30 per kilogram as of early November, and spot prices of $20 are possible by the March/April timeframe given the continuing decline in demand. Meanwhile, module prices will be driven by production costs, with the rapid fall in the cost of silicon expected to pave the way for cheaper modules to be produced.

Given the intense competition in the market and the current oversupply, gross profit margins from wafer to module production will be in the single-digit range. Even best-in-class companies will not be able to escape the pressure on margins, and businesses will need strong plans for navigating the crunch, IHS believes. For example, First Solar Inc. has chosen to postpone the commissioning of a solar plant in Vietnam while prices and demand are low. Manufacturers also will have to excel in their operations and increase performance without spending in order to stay profitable.

The overall picture for solar PV could improve soon, with system prices stabilizing in Q4 2011 at 1.50 euros/W for ground and 1.80 euros/W for rooftops, due to increasing orders.

Worldwide demand also is expected to pick up by April 2012, driven by demand in Europe as well as by supportive local programs coming online in China and the emergence of new markets such as India.

A healthier business environment for the PV industry could well emerge by the end of the first half of 2012 -- but only if demand returns as a reaction to the low system prices on the market.

Table. Top 6 solar countries in 2011 by new PV installations (in MW). Source: IHS iSuppli Research, December 2011.
2011 Rank	Location	2010	2011	Annual Percentage Growth
1	Italy	3,577	6,900	92.9%
2	Germany	7,408	5,923	-20.0%
3	United States	915	2,703	195.5%
4	China	537	1,726	221.4%
5	Japan	990	1,300	31.3%
6	France	719	963	34.0%