With PV module manufacturing capacity having increased by almost 70% in 2010, slowing demand growth this year is expected to result in significant overcapacity throughout the first-half of 2011, according to the latest report from IMS Research. However, the market research firm expects the many Tier-2 module suppliers to suffer the most from waning demand and lower prices as major players will continue to meet demand and generate sales via secured project pipelines. IMS Research expects PV installations to slow from over 100% growth in 2010 to less than 20% in 2011.
“Leading module suppliers with healthy gross margins, proven products, and large contracted sales for 2011 remain optimistic, and can perhaps afford to be,” noted Sam Wilkinson, Research Analyst at IMS Research. “However, in the short term, there is not sufficient demand to support the whole industry’s planned capacity expansions and IMS Research predicts that many smaller Tier-2 suppliers may face difficult times in 2011.”
Wilkinson noted that many of the Tier-1 suppliers were predominantly “sold-out” last year, which enabled them to meet growing demand.
“This is not likely to be the be the case this year, with demand increasing at a far slower rate and Tier-1 suppliers, who are typically favoured by investors, bringing significant new capacity online,” added Wilkinson.
Slowing demand in 2011 is due to feed-in tariff cuts in the three primary markets of 2010, Germany, Italy and the Czech Republic, according to the market research firm.
However, aggressive capacity expansion plans continue that will result in an estimated 35GW of annual capacity being reached within the first half of 2011, IMS Research noted.
Installations in the same period are only expected to reach no one fifth of that amount, increasing competition and driving prices lower.