PV module backlog swells to 10GW, not easing until 3Q11

Worldwide PV module inventories surpassed a record 10GW in 1Q11, and their high levels (along with some European market incentive shifts) are rapidly eroding prices, according to IMS Research.

May 26, 2011 – Worldwide PV module inventories surpassed a record 10GW in 1Q11, and their high levels (along with some European market incentive shifts) are rapidly eroding prices, according to IMS Research.

A slower annual start in several key European markets, capped (pun intended) by the Italian market slamming on its brakes, are spiking inventory levels throughout the supply chain, from manufacturers to distributors to integrators and installers. Most of it — up to 8GW, IMS says — has already been shipped and is sitting in distribution and sales channels, waiting to be installed and hooked up to the grid. That compares to a typical 4GW-5GW level throughout 2010, equivalent to about a quarter’s worth of production — which is reasonable, given an average three months to ship, deliver, and install modules at their end destination, says IMS Research PV analyst Sam Wilkinson. And while the 10GW stockpile might be a “shocking” number, in reality it’s only about a quarter’s extra worth of product sitting around above “normal.” On top of end-market concerns backing up product in the pipeline, production at the start has far exceeded shipments.

All this PV module inventory building up has a clear outcome: prices will go down, and fast. IMS sees further declines in average prices. But ultimately that’s a good thing, since lower prices will spur more demand and lead to strong recovery in the market, with growth especially in Germany and the US, IMS says. Look for high inventories to “begin to be corrected” by 3Q11.

Click to Enlarge
Cumulative channel inventory (in GW) as a proportion of
quarterly shipments (in GW). (Source: IMS Research)

 

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