IHS iSuppli says that overall, installations are forecast to "rise robustly" in 2011. However, it states that growth will not be without its problems. Consequently, it believes the first quarter will see a "temporary dip" in new installation demand, which will lead to bigger supplier inventories.
In a statement, senior PV analyst Stefan de Haan writes: "Stockpiles for materials and products across the PV supply chain are set to spike in the first quarter, as a result of a short-term softening in demand for new solar installations. Days of inventory (DOI) will expand by 22.9 percent for crystalline silicon (c-Si) modules and by 21.4 percent for thin film (TF) modules. The industry average DOI for c-Si modules in the first quarter of 2011 will reach 48, up from 37 in the fourth quarter of 2010. DOI for thin film modules during the same period will reach 41, up from 32."
The research company goes on to say that PV modules will suffer the most, but solar polysilicon, wafer and cell materials also will see DOI increases.
IHS iSuppli believes this news is an indicator of a "looming overcapacity situation". However, it adds that the increased inventory will only affect the first two to three months of the year.
"A major factor behind the solar inventory spike is the subsidy-driven nature of the PV market," continues de Haan. "Feed-in tariffs in many countries decreased on January 1, reducing government incentives to install new systems in early 2011. Furthermore, demand – usually lighter toward the beginning of any year – also is being depressed by unfavorable weather conditions prevailing in key European countries. Combined with a less pronounced year-end rally in 2010 compared to 2009, the slowing in demand has resulted in a pileup of inventory."
On a more positive note, the company says global demand will "rebound sharply" over the year, thus helping to rectify the inventory situation. As such, over 2011, the company believes supplier inventory will rise "only slightly" in comparison to 2010.
Additionally, it says most manufacturers will not have to cut production. De Haan concludes: "DOI might reach 2009 levels, but a major inventory glut as deleterious as that seen during the first half of 2009 is not likely to recur."
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