The inventory glut of solar panels is starting to deplete due to
strong demand from Germany, says iSuppli.
The rise in German sales means that the global supply of solar
panels now is expected to exceed demand by 65.9% in 2009, down from
iSuppli's previous forecast announced in August of a 91.9%
overage.
"Solar-panel installations in Germany began surging to record
levels in July as prices for Photovoltaic (PV) systems plunged,"
says Dr. Henning Wicht, iSuppli's senior director of photovoltaics
research, "this phenomenon has boosted the global solar panel
business and mitigated the severe oversupply situation that has
stung the industry throughout this year."
iSuppli now is forecasting that Germany will install 2.5
Gigawatts (GW) worth of solar panels in 2009, compared to its
earlier forecast of 1.53GW. This will help drive worldwide demand
for solar panels to 5.2GW in 2009, up from iSuppli's former
expectation of 3.9GW.
Nevertheless, global demand for solar panels still is expected
to fall by 3.8% in 2009 compared to 2008, a dramatic change from
the double-digit growth seen in recent years.
The global PV market entered a severe downturn in early 2009 due
to a sharp decline in expected installations in Spain. With
suppliers ramping up production at a rapid pace, the drop in demand
triggered a severe inventory pileup that caused prices to fall.
Prices for solar systems in July fell by 20% compared to the
beginning of the year.
The German market seized on these attractive prices, spurring
the massive increase in sales.
Based on the massive oversupply situation in early 2009, it
appeared that the panel glut would persist through the year 2010.
However, with Germany exhibiting strong demand elasticity in the
face of price reductions, the glut could be resolved as soon as
next year, depending on how the industry reacts.
"Supply and demand dynamics in the fourth quarter will set the
tone on whether the oversupply situation continues in 2010," says
Wicht, "if panel makers reduce production during the fourth quarter
of this year, anticipating the seasonally weak first quarter in
Germany, then supply and prices could stabilize."
To maintain the investor momentum in the largest national
market-Germany-system prices must be reduced by 10% again in 2010.
Distributors and wholesalers already are preparing for the first
quarter by announcing price reductions for 2010. This will help
prevent a stall in sales, such as occurred in spring 2009.
If the industry manufactures at its full capacity, there would
be a panel oversupply of 75% in 2010 compared to expected
installations. However, manufacturers are not expected to produce
at full capacity due to issues including inventories, further
strategy shifts, manufacturing cuts and consolidation, reducing the
expected level of oversupply.