PV module shipments declined in the first quarter of this year (Q1'11) – compared to the numbers seen the previous quarter – for the first time since the beginning of 2009. Prices have also begun to decline rapidly since the abrupt halt to demand in the booming Italian market, in the lead up to last week's announcement of Italy's new feed-in tariff (FIT).
According to the latest analysis of the global PV industry by IMS Research, global PV module shipments for the quarter declined by nearly 10%. Average prices, which had remained strong throughout 2010, supported by high demand from major European markets, also fell sharply.
Shipments and prices are forecast to continue their decline in the second quarter, with the prices of crystalline modules from Chinese tier-two suppliers falling the quickest.
Great uncertainty in the Italian market has been a significant factor in slowing the booming PV market, IMS Research says. Demand from Italy came to a standstill overnight when it was announced that the current FIT would be suspended. This development has led to high inventory levels and crashing end-market prices.
‘Suppliers that are dependent on the Italian market saw demand for their products quickly evaporate when the feed-in tariff was suspended,’ says Sam Wilkinson, PV market analyst at IMS Research. ‘Many manufacturers rapidly adjusted production in an attempt to prevent stock from building.
‘However, distributors were already stocking large amounts of product, and the total worldwide PV module inventory has now reached a record amount of over 10 GW in Q2'11,’ Wilkinson continues. ‘Many companies have already begun dumping prices in order to clear it.’
The Italian government's May 5 confirmation of the country's new incentive scheme is expect to ‘restart’ 2010's second-largest PV market and slow the rapid decrease of prices. However, IMS Research predicts that long-term damage to investor confidence and caps to the subsidy scheme will mean that the Italian market will not reach its 2010 size again this year.
Despite the outlook in Italy, IMS Research predicts positive growth for the global PV module market this year, and full-year shipments are forecast to grow by nearly 20%, driven by continued demand from new gigawatt-scale markets, such as the U.S., and continued demand from European countries.