Massive 168% photovoltaic module overcapacity to cause pricing collapse in 2009

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  iSuppli pv module supply demand 2008-9

The photovoltaics industry will become a victim of its own success in 2009, according to Dr. Henning Wicht, Senior Director and Principal Photovoltaics Analyst at iSuppli Corp. Eight consecutive years of growth coupled to low barriers to entry have resulted in a significant expansion in solar module production that will see supply exceed demand by 102% in 2008 and reach a massive 168% excess in 2009. Module revenues are expected to fall nearly 20 percent in 2009 to US$12.9 billion, compared to US$15.9 billion in module revenues expected in 2008.

“Supply and demand were already unbalanced in 2008 with 100 percent more modules produced than installed,” said Dr. Henning Wicht, Senior Director and Principal Analyst, photovoltaics for iSuppli. “The short-term boost in demand from Spain and Germany kept installation companies busy and solar orders and module prices high. But this boom is over. In 2009, average prices for panels for new installation contracts will collapse to the $2.50 to $2.75 per watt range by the end of 2009, down from the current level of $4.20 per watt. The average price for the year will be $3.10 per watt.”

According to Wicht, solar module installations will reach 3.8GW in 2008 and rise to 4.2GW in 2009, a 9.6 percent rise. However, PV module production will reach 7.7GW in 2008 and 11.1GW in 2009, forcing module prices down, overall revenue decline and a significant risk of many new entrants, especially from China and Taiwan going out of business. 

During the second half of 2010, after a number of manufacturers have exited the market, Wicht expects prices and revenues to rebound. The forecast for 2010 is for revenues to reach US$17.8 billion, a 38.2% rise over 2009, followed by growth of 11.1% in 2011 and 29.1% in 2012.

The plummeting module prices in 2009 could, according to Wicht, actually fall close to production costs for c-Si panels but could spark an additional 20% growth in installations with market revenue rising by 15.7%. The limited upside growth would be due to installers being unable to meet demand.