IMS: Brighter outlook for 2011 PV capacity

Major demand in all major markets will overcome a very weak early start to the year and make 2011 a bit better than expected for PV capacity, and even 2012 is looking up too, according to new projections from IMS Research.

August 2, 2011 – Major demand in all major markets will overcome a very weak early start to the year and make 2011 a bit better than expected for PV capacity, according to new projections from IMS Research.

The firm now says more than 22GW of new PV capacity will be added this year, as installations nearly double in 2H11 thanks to signs of life in Germany’s sluggish market and notable demand in Asia and the US. (This is the second hike for IMS’ 2011 installation projections; it started with 20.5GW in January, and raised that to “more than 21GW” in late May.) After a weak 1H11, in which installations increased just 13% in 2Q11 vs. 1Q11, look for demand to take off in 2H11 thanks to rapidly falling module prices, establishing incentives in new markets, and planned cuts in existing markets by year’s end, says Ash Sharma, senior research director for PV. “There will be a huge surge in installations in the second half of the year,” he predicts, as midsize markets including the US “are growing massively” while troubled European markets Germany and Italy start to pick up as well.

A closer look at the reasons for the forecast bump:

Europe flat, which is a good thing. Overall Europe will only be down -1% in 2011 despite Germany’s pullback, thanks to widening diversification e.g. Slovakia and the UK. Eleven European countries will install at least 100MW in 2011, and 20 globally overall (vs. 13 in 2010), showing how the industry is spreading its wings (and thinning its risk beyond depending one or two key markets).

Note that overall it’s still an EU-driven market. Only four of the top 10 markets are in Europe, but the next five below that are European, Sharma notes, and nearly 70% of global installations in 2011 will happen there. Sliding off the top 10 list were the Czech Republic and Belgium, both of which have cut their tariffs — in the Czech’s case, “ground-mount projects [are] now virtually impossible,” and a tax has been suggested on existing projects, noted Sharma.

Asia surging, China roaring. A big underpin of IMS’ forecast increase is China’s just-unveiled national FIT — in addition to the existing Golden Sun program — which pays a premium for installations completed in 2011, and even continues past the end of the year. Sharma sees 1.3GW of installations in China this year and more than 2GW in 2012, as China emerges as a key long-term player in PV not just for manufacturing but also an end-market in its own right — he sees it as one of the top three global markets by 2015.

Better 2012 ahead? IMS’ projections for 2012 also represent a better outlook than it had before. Citing data from 60 downstream markets and hundreds of survey participants through the industry and supply chain, Sharma says there’s a very different picture being painted vs. the general doom-and-gloom handwringing being played out. The Chinese FiT, a diversifying global market, and new incentive schemes in nations across the globe “presents a much more optimistic, but still very challenging future for the industry,” he says.

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