IMS Research analyst Sam Wilkinson takes a closer look at PV module shipments and trends so far this year, and why early 2011 will be very different.
by Sam Wilkinson, IMS Research
July 7, 2010 – The PV market continued to perform strongly in 1Q10, and PV module shipments increased for the fourth consecutive quarter, according to IMS Research’s latest quarterly report on the PV cell & module market. PV module shipments reached a record of 3.6GW, fueled by high demand from major PV markets, particular Germany where speculation over its proposed feed-in-tariff cuts has driven demand to new levels. Module shipments are forecast to continue increasing for the next two quarters and predicted to reach 4.3GW in 3Q10.
|Figure 1. Global PV shipments, in GW. (Source: IMS Research)|
After declining by an average of 10% each quarter in 2009, high demand resulted in relatively small price decreases from 4Q09 to 1Q10. Average factory-gate prices of crystalline modules fell just 2% in Euros to €1.41 between the two quarters, despite the German FIT reducing by 9%-11% as planned at the end of the year. In 2Q10, average crystalline module prices are estimated to have increased by 1% in Euros over the previous quarter. However, the weakening of the Euro in the first half of 2010 has meant that although module prices are forecast to remain relatively stable (in Euro terms) throughout the rest of 2010, revenues/Watt realized by suppliers outside of the Eurozone in local currencies will in fact decrease. By the end of the year, prices are forecast to have fallen just 1% from their levels in the final quarter of 2009.
Figure 2. PV module prices (€/W) and gross margins (%), 2Q09-1Q11. (Source: IMS Research)
Total global installations are forecast to reach 14.6GW this year — but new PV installation growth in 2010 will be capped by limited inverter supply. 1Q11 is predicted to be very different to the first quarter of 2010 when speculation of additional cuts to incentive schemes drove unusually high demand in Europe, where installations are normally slowed by cold weather. As such, classic seasonal installation patterns are predicted to return and completed installations are forecast to decrease by nearly 40% in 1Q11. IMS Research predicts that this stall in demand for installations after 31st December 2010 will to initiate a slowdown in module shipments from 4Q10.
Increased capacity, decreased demand
PV cell and production capacity is forecast to continue increasing each quarter throughout 2010. Production capacity for PV cells is predicted to exceed 33GW at the start of 2011, with 78% of this capacity located in Asia.
Increasing capacity being met with slowing installations and shipments is likely to result in supply exceeding demand once again and utilization falling sharply. The resulting tougher competition, and further annual reductions to European FITs, indicates that price declines are likely again from 1Q11 — IMS Research forecasts that average PV module prices will decline 8% in the first quarter of 2011.
Consequently, module capacity utilization is forecast to decrease from its peak in 4Q09 to just over 50% in the first quarter of 2011. As a result of weakened demand and softening prices, gross margins are forecast to fall to 27% having remained over 30% throughout the second half of 2010.
First Solar still first– but Chinese crystalline rivals catching up
First Solar remained the largest supplier of PV modules in 1Q10, although its share of module shipments decreased for the fifth consecutive quarter and the gap between it and crystalline competitors closed further. Although total PV module shipments are forecast to grow by 60% in 2010, shipments of cadmium telluride (CdTe) modules (dominated by First Solar) are forecast to increase by just 20% due to limited capacity increases for the technology until 2011.
|Figure 3. PV module shipments, share of total (%). (Source: IMS Research)|
While Western suppliers still accounted for a larger share in 1Q10, Chinese Tier 1 suppliers (Suntech, Trina, Yingli, Canadian Solar, and Solarfun) increased their share of PV module shipments every quarter throughout the last year. These five suppliers’ shipments accounted for 28% of the PV modules shipped in 1Q10. In total, 47% of modules shipped in 1Q10 were from Chinese suppliers.
Ongoing analysis of the PV cell and module market is available each quarter from IMS Research’s latest report: PV cells & modules — Quarterly shipment, revenue, pricing, margin, capacity, utilization and market shares.