An important but unintended consequence of the global PV industry meeting at Intersolar Europe, held last week in Munich, Germany was a general fear that the market could decline this year after poor installation figures in key European markets stalled hope of continued growth. According to IHS iSuppli spot prices from the top Chinese brands had been running at US$1.49 per watt for c-Si modules before Intersolar, yet as the show prices had fallen to US$1.30 per watt. This has prompted the market research firm to guide prices to decline to the US$1 per watt by the first quarter of 2012.
“The recent price decline was quickened by top-tier module brands dropping prices to aggressively position themselves, in the face of fears that the industry could be headed toward a down market next year,” said Henning Wicht, senior director and principal analyst, photovoltaics, at IHS. The drops in pricing were spurred by the recent price slide in cells and wafers, with wafers being quoted in the $2.30 per-piece range, down from $3.50 in March.
The major milestone for the PV industry could have a positive effect on demand dynamics. IHS iSuppli believes that current concerns that 2012 could be a poor year for installations could be reversed due to the price declines fuelling demand, despite government policies and FiT reviews and reductions.
Mike Sheppard, analyst for photovoltaics and financial services at HIS said, “This trend and milestone is significant in that it opens the door for certain installations to potentially drop to US$2.00 per watt, in what one hopes would be an important driver for stimulating demand. Not only could such a development ward off a dip predicted in solar installations for 2012, it also signals that deep-pocketed and lower-cost structured companies will be getting aggressive about pressuring competition out of the market during the next year.”
IHS iSuppli is also guiding that gross margins for module manufacturers are expected to be in the range between 10 to 12% in the second quarter. Yet the intense competition will result in margins falling to between 5 and 9% by the second quarter of 2012.