Finally, demand for PV installations in Germany is set to soar, according to the latest report from market research firm IHS iSuppli. It didn’t happen in the third quarter as many had expected — after weak installation figures in the first-half of the year meant there were no midyear FiT regressions. Weak demand and manufacturing overcapacity have seen continued price declines, eliciting the questioning of when demand elasticity would kick-in. German PV installations are now forecasted to reach 5.9GW in 2011, down 20.4% from 7.4GW in 2010.
The overall decline in installations may be not be viewed as a positive within the industry, but the weak demand environment until now means a mini-boom for suppliers and installers through to the end of year.
The spike in demand is said to be due to the realization that a 15% reduction in the German FiT is only three months away.
However, the supply chain may prove to be a bottleneck, according to the market research firm.
“Given the sluggish demand in the third quarter, the major Chinese suppliers reduced their factory utilization levels in the third quarter,” noted Henning Wicht, senior director and principal analyst for IHS. “Because of this, some Chinese suppliers may not be able to ramp up production in time to capitalize on the demand surge in Germany. With delivery time of six weeks, these suppliers have a short window of opportunity to get their products shipped to Germany.”
Wicht said that Tier 1 and Tier 2 module manufacturers that are closely linked to wholesalers in Germany should do well out of the mini-rush but nonbranded and lower-tier suppliers may not do as well, since many sell on the spot market and may find the geographical distances in shipping too long to fully capitalise on the market demand dynamics.
Overall, global PV installations are forecasted to grow 21.7% in 2011 and slow to 13.7% growth in 2012, according to IHS.
However, installations in Germany are set to decline for several years in a row, decreasing 15.3% next year to 5GW.