The company says in terms of global PV installations, 18 gigawatts (GWs) is now achievable as demand scenarios further crystallize. In a statement, it explains: "In particular, a robust Italian market will support higher module average selling prices in 1Q11 until other markets hit their stride after investors adjust new system economics in the wake of the January FIT declines."
Furthermore, analysts for the company say despite consensus that Italy will reach between two to 2.5 GWs of capacity this year, they believe these figures are conservative in view of the country's "massive" fourth quarter number.
In line with iSupplis predictions over the Italian PV market, Jeffries believes momentum in Italy will carry on into 2011 and trigger upward revisions to global demand forecasts. It says the country offers some of the highest unlevered internal rates of return (IRRs) in the industry, ranging from between 15 and 20 percent, depending on the region. Additionally, a "whopping" 975 megawatts (MWs) of PV were connected in the fourth quarter of last year.
The company comments: "Although Italy is notably back half loaded, Italy is likely to double in 2011. Supported by IRRs strong enough to absorb the planned quarterly FIT digressions, we now expect Italy to approach three plus GWs in 2011 compared to our previous two GW projection.
"While this increases the risk that the regulator will step in and cut the FIT, we note that Italy has some of the highest electricity prices in Europe and is closest to transitioning to an unsubsidized market. The country is overly dependent on energy imports making it a haven for distributed solar solutions regardless of weakening support mechanisms."
In terms of making up for the decrease in German PV activity, the company says Italy and the Czech Republic helped to offset German "weakness", with installation data from both countries shedding some light onto the robust shipping and pricing dynamics in the fourth quarter of 2010.
The Czech energy regulator (ERU) has reportedly published preliminary installation data through December 2010. Accordingly, the Czech solar market is expected to have installed circa 408 MWs of new PV capacity in the last two months.
The new data implies the Czech Republic installed some 1,151 MWs of new PV systems last year. "This surpasses our 700 MW target," says Jeffries, "but falls well short of the overly aggressive Street view looking for between 1.5 and two GWs for the year. Our checks indicate the Italian solar market grew some 160 percent y/y to 1.9 GWs, topping our 1.5 GW projection and Street forecasts."
The German Bundesnetzagentur (Federal Network Agency) has published preliminary October installation figures. The German solar market reached 5.9 GWs with 351 MWs installed in October. "This leads us to believe our seven GW projection is correct, which should ease concerned politicians ready to pull the emergency break to halt a potentially runaway market. We do not anticipate a large December "catch up" of recorded installations given that 2010 was 1H loaded on pull-ins, and that modules were capacity constrained," continued Jeffries.
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