Record Quarterly Global Photovoltaic Demand of 4 GW in Second Quarter 2010

Reviewing the results of the past 5 quarters, the industry data displays large variations between end-market demand and also manufacturer shipments. Projections for first and second quarter 2010, the outlook period in the report, suggest that major demand and shipment swings are set to continue in 2010.

Fourth quarter 2009 end-market revenues increased by 63% from 12 months ago and 44% over the prior quarter, as demand increased fast enough to offset price declines for installed systems.

The fourth quarter 2009 PV market reached a record high, at 2.9 GW – 453% times larger than first quarter 2009 following a massive rise in European demand through the year. The end market ramp up was driven principally by Germany, Italy and the Czech Republic. Germany alone accounted for 52% of the global demand in the quarter.

Among industry leaders, Sharp, SunPower Corporation, First Solar and Suntech Power all generated solar revenues in excess of $500 million (equivalent) in the fourth quarter.

However, preliminary estimates show average solar cell manufacturer gross margins of 8% in fourth quarter 2009, down from 15% one year earlier.

Meanwhile, wafer, cell and module capacity utilization grew in fourth quarter 2009, while polysilicon held steady and thin film dropped.

The photovoltaic world market is now projected to maintain this upward trend, reaching a new quarterly peak of 4.0 GW in Q2 2010. This early-year strength will create a period of relative pricing stability. Crystalline silicon module factory-gate prices – having fallen 22% between first and fourth quarter 2009 after the decline of the Spanish market at the end of 2008 – are projected to remain flat in Europe through most of second quarter 2010.

Over the outlook period, module production is projected to rise 7% in first quarter and a further 19% in second quarter 2010. Thin film production will account for 17% of global shipments in first half of 2010.

By mid-2010, module manufacturers’ inventories will hold close to steady from the start of the year, while downstream (distribution and installation) inventories are projected to decline by 26 days over the same period. However, once the German policy adjustments are implemented in the second half of 2010, corporate outcomes will become dependent both on the discipline of the downstream to manage inventories and the manufacturers to manage production levels.

"The data demonstrates clearly that managing quarterly corporate performance in 2010 will be even more challenging than it has been over the past two years – a period that proved to be a roller coaster ride for sales revenues and profitability," said Craig Stevens, President of Solarbuzz, a division of The NPD Group. "In the event that production is not moderated in the second half of the year, the outcome will be a return to more price disruption. However, unlike 2009, there will be significant consequences for high cost producers."

The full PV industry picture is revealed in the new Solarbuzz® QUARTERLY report issued today. It provides a concise quarterly analysis of the key PV industry data including regional market demand, module production and shipments, upstream and downstream module inventories, factory gate pricing and gross margins through 2009. It also summarizes the market and policy developments over the last quarter, and provides insight into supply/demand projections through to Q2 2010.