Global PV installation to witness moderate growth in 2011; concerns of oversupply remains

TAIWAN: According to EnergyTrend, a research division under TrendForce, total global capacity in 2011 is estimated to maintain at 20GW-25 GW, while demand remains at 15.5GW-20GW, based on the analysis of supply and demand of the solar energy market in 2011.

Therefore, concern of oversupply sill remains. As for price trends, due to decreasing subsidy of major European countries, if prices cannot accurately reflect internal rate of return (IRR) performance, it would reduce the general public’s willingness to install solar energy systems. In light of that, EnergyTrend believes that the price is expected to reach $1.25/W in 1Q11.

In respect of solar energy industry outlook, EnergyTrend belives that the market will increase stably, and worldwide demand grows at the speed of 20-25 percent in YoY. However, several key markets are likely to be affected by decreasing subsidies in 2011, and the growth rate will be below 20 percent.Source: EnergyTrend.

In addition, TrendForce estimates that global installation volume in 2011 is expected to be in the range of 15.5GW to 20GW, while the capacity in 2011 ranges from 25GW to 30GW, leading to the concern of oversupply.

In terms of market outlook by region, the installation volume in the European market in 2011 slightly declines compared with that of in 2010, while the installation volume in China, Japan, and the US rises. In aggregate, total global PV installation volume will likely rise.Source: EnergyTrend.

In light of price trend, it is certain that the price comes to $1.25/W in 1Q11. According to EnergyTrend’s survey, the price of solar cell in December 2010 has dropped and the quote price from main manufacturers has decreased between $1.35/W and $1.38/W, (+3~5 percent MoM).

In terms of 1Q11price, TrendForce believes that IRR performance is affected by key European countries, such as Germany, Czech, and France. According to EnergyTrend’s survey, when compared with the current price, it is no longer attractive if the price decreases by less than 5 percent, IRR<6.5 percent; furthermore, if the price decreases by 10 percent, IRR will return to 10 percent. Hence, TrendForce believes that it is possible that the price may reach 1.25/W in 1Q11.

TrendForce indicates that market demand uncertainties in 2011 arise from the impact of a third quantitative easing (QE3) monetary policy by the US. Since QE3 is possibly launched by the Fed, flood of capital increases substantially. In order to find a gateway for excess capital, investing in the renewable energy industry is the best choice.

Judging from global financial crisis in 2008 and 2009, the demand of global renewable energy did not weaken. However, due to dramatically declining capital flow, construction programs related to renewable energy are put off.

Nevertheless, since the second half of 2009, quantitative easing monetary policy and increasing capital flow allowed relevant programs to be revisited. EnergyTrend forecasted that quantitative easing monetary policy will be an X factor for worldwide solar market development.

TrendForce indicates that the price fluctuation of solar cells is only limited to the transactions between solar cell manufacturers and module manufacturers at this stage. Hence, the price of wafers and Poly-Si still remains the same, which is not affected by the declining transaction price for the downstream clients.

If the pressure from the decreasing solar cell price continues to increase, the solar cell manufacturers are forced to reduce the prices of wafers and Poly-Si to reflect costs.