More than 21 GW of new PV capacity is predicted to be installed this year – up from around 18 GW in 2010, according to IMS Research's latest report on PV demand.
The firm says it has raised its outlook for this year based on new information regarding supply chain pricing which will help stimulate demand in major markets. However, it also cut its long-term forecast slightly due to decreasing incentives in several markets.
IMS Research's latest analysis of global PV demand revealed that installations will grow just 15% this year and that prices are falling rapidly enough to create another surge in demand in markets such as Germany.
In addition, now that the decree in Italy on incentives has finally been implemented, life will return to the paralyzed market, which was simply waiting and watching in the first quarter of this year (Q1'11), IMS Research says. Installations were 37% down in the quarter, with approximately 3.5 GW of new capacity. This number is forecast to increase steadily each quarter throughout the year, culminating in a very large fourth quarter.
One significant outcome from the latest PV demand database is that European installations will fall this year and next year.
‘Europe's share of the PV market will fall considerably in the next three to five years; in fact, we predict European installations will decline in both 2011 and 2012 and will not return to the 2010 level for quite some time,’ says Ash Sharma, PV research director.
‘Despite many governments' indicating that renewable energy will become a larger part of their energy policies in the wake of the Fukushima crisis, it is less clear whether this talk will translate to real support for the PV industry,’ Sharma adds. ‘The governments associated with most major markets have either cut incentives recently, or indicated that they will do so soon.
‘We predict demand from Germany and Italy alone to fall by 3 GW in 2012, and Europe's share of global demand to fall from 80 percent in 2010 to 56 percent in 2012,’ he adds.
IMS Research also predicts a single-digit decline for PV installations in 2012 due to both the falls forecast in Europe and uncertainty in the U.S. and Asia. Although both of these markets are growing well this year and are predicted to exceed 5 GW combined, it is not yet clear if growth can be sustained in 2012 and if government policy will fully support PV.
Although the Chinese government announced it was to double its target for PV capacity, IMS Research believes that market growth will be limited to government-controlled projects and that a feed-in tariff will not be introduced for several years, as system prices are considered too high.
‘Yet again, the outcome of the PV industry's development in 2012 will be entirely dependent on reducing costs rapidly enough in order to keep prices in line with incentives in major markets,’ says Sharma. ‘Although margins are now being squeezed and prices are beginning to fall, further reductions are needed in 2012, and the key now lies in polysilicon and wafer supply to do this.’