By Renewable Energy Focus staff

The growth of PV installations being predicted to slow from over 100% in 2010 to less than 20% in 2011, the analyst says.

Solar PV module demand reached record levels in 2010 driven by incentive schemes, particularly in European countries like Germany, Italy and Czech Republic – the three largest markets last year.

However, they have reduced the rates offered for electricity generated from solar PV systems from the start of 2011; and as a result, whilst global solar PV installations are still set to increase in 2011, they will do so at a far slower rate.

Capacity increases

Despite slowing solar PV installations, most suppliers, many of which remained capacity-constrained throughout 2010, are proceeding with aggressive capacity expansions. IMS Research forecasts that 35 GW of annual capacity will be reached within the first half of 2011 – although installations in the same period are predicted to reach no more than 20% that amount.

The likely result is an oversupply of solar PV modules this year, leading to tougher competition and decreasing prices from suppliers, IMS Research warns.

“Leading module suppliers with healthy gross margins, proven products, and large contracted sales for 2011 remain optimistic, and can perhaps afford to be,” says 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.

“These suppliers experienced high demand for their products throughout much of last year and were able to capitalise on many larger companies being sold out.

“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,” Wilkinson adds.