EU PVSEC takeaway: Behind the growth, caution and worry

Talks with cell and module suppliers at last week’s EU PVSEC show in Valencia, Spain, confirmed industry observations about stunning growth — but also preparations for rocky times ahead and caution over incentive cutbacks across the region, according to IMS Research.

September 15, 2010 – Talks with cell and module suppliers at last week’s EU PVSEC show in Valencia, Spain, confirmed industry observations about stunning growth — but also preparations for leaner times ahead and caution over incentive cutbacks across the region, according to IMS Research.

Discussions with “more than 50 major cell and module suppliers” confirmed some of the recent analysis of industry growth — e.g. PV module shipments growing for a sixth consecutive month in 2Q10 to 4.4GW and “extremely high” utilization rates to keep up with demand through the year, says Sam Wilkinson, research analyst in IMS’ PV Group, in a new research note. By the end of 2Q about 4.3GW of modules had been shipped, but not installed — but importantly, much of this is still in transit through Asian distribution channels or in systems yet to be hooked into the grid, and not just sitting in warehouses (which would indicate stockpiling or soft demand). Inventory levels are expected to decline in 4Q10 after an installation surge, but their high levels now and upcoming anticipated slowing of demand will likely impact shipments all the way to early 2011.

And how that balance of supply, demand, and inventory plays out is still very much unknown. IMS now projects the global PV market to exceed 16GW this year, with demand doubling or more in key regions including Europe (notably Germany), North America, and Asia (notably China). “Global demand totaled around 8GW in the first half of 2010, and all of our indicators show that the rest of the year will be as strong, if not stronger,” writes Ash Sharma, PV research director at IMS, in a separate statement.

But 2011 likely will present a much different picture. “The majority of cell and module suppliers are preparing for harder times and remain cautious as to how the market will cope with incentive cuts in Germany, Italy, France, Czech Republic and other markets at the close of the year,” Wilkinson says. Based on conversations with dozens of suppliers throughout the entire supply chain, “very few are reporting any visibility beyond the fourth quarter,” he writes, “and are bracing themselves for a major reduction in demand and shipments.” He predicts >5GW of PV installations will be connected to the grid in 4Q10 alone — followed by a 65% dropoff of installations in 1Q11.

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