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PV Cell Capacity Continues to Climb But Margins Will Fall in 2011
Date: 28 September 2010

Annualized PV cell production capacity increased once again in Q2’10, reaching over 25 GW according to a recent report from IMS Research. IMS Research forecasts that capacity will reach 33 GW by the end of the year, over 80% of which will be for crystalline cell technologies and warns that gross margins will fall in 2011.

Megawatt shipments of PV modules grew 15% in the second quarter of 2010 over Q1’10 according to IMS Research’s latest market report. This growth, marked six consecutive quarters of increasing shipments and took total modules shipped for the first half of the year to over 8 GW, only slightly less than the whole of 2009. Revenues generated by PV modules in the same period amounted to over $15 billion.

With module demand so high, it is not surprising that new cell production lines are being added at a frantic pace to capitalize on the booming market. However with demand looking uncertain going into 2011, a dramatic slowdown in growth imminent and likely weak Q1’11 and increasing poly prices, gross margins of cell suppliers are looking particularly vulnerable.

Asia’s share of cell capacity also continued to increase in Q2’10 and IMS Research forecasts that it will continue to increase through to the end of 2010. “Asia has continued to add cell capacity faster than other regions throughout 2010, further increasing its already huge share of global production capacity” commented Sam Wilkinson, PV Research Analyst, “As many of the key incentive schemes that drive the market today continue to reduce, companies remain more focused than ever on reducing costs and we have seen many leading European suppliers such as Solarworld, Q-Cells and REC shifting to factories in Asia in an attempt to compete with the low costs of their Asian competition.” IMS Research predicts that nearly 80% of cell capacity will be located in Asia at the end of the year, over half of which will be in China.

However, although utilization is currently high and most suppliers are running their factories at full capacity, weakened demand is predicted early in 2011 and utilization is forecast to fall below 50%. IMS Research forecasts that as a direct result of decreased utilization and declining prices, gross margins will also decline.

Ongoing detailed quarterly analysis of PV module demand, supply, pricing, margins, costs and installations is available from IMS Research. If you would like an interview with an expert in this area, please contact Ash Sharma, Research Director, Ash.Sharma@imsresearch.com or +44 1933 402255 or visit www.PVMarketResearch.com

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