PV module inventory levels have ballooned to record levels, according to market research firm IMS Research. An incredible 8GW of modules are said to be in the supply chain, while a further 2GW is sitting in PV manufacturer warehouses, waiting to be shipped. The global PV industry has been hit by weak demand across key European markets such as Germany and Italy, while feed-in tariff reviews in Italy and UK have also contributed to lacklustre installation figures that have lasted until May.  Inventory levels at manufacturers, distributors, integrators and installers have all climbed during the first half of 2011, according to the analysts.

IMS Research explained that this high level of inventory has yet to be installed, with the result that module prices are falling rapidly as PV suppliers throughout the supply chain become increasingly desperate to shift excess stock.

“Throughout 2010, when all products were moving quickly through the supply chain, channel inventory typically stood at four to five gigawatts; which is roughly equivalent to one quarter’s production. Generally speaking, a module will take around three months to be shipped, transported, and make its way through distribution channels before being installed, so this figure appears reasonable,” commented PV research analyst Sam Wilkinson. “Many in the industry consider today’s inventory level to be shocking. However, it represents an increase of only around three to four gigawatts over ‘normal’ levels.”

IMS Research predicted that further declines in average PV module prices will lead to a strong recovery in the PV market, leading to a decline in the high inventory levels in the third quarter of 2011. The market research firm believes that falling prices would benefit growth in Germany and the USA in particular.