MUNICH, Germany Despite a surprisingly strong demand in Germany, the global solar panel market suffers from extreme oversupply. For the next few quarters, much will depend on the demand development in Germany as the world's largest single solar panel market, finds a study from market researcher iSuppli.
For the first time in history, the global demand for solar panels will decline in 2009, believes Henning Wicht, senior director of photovoltaics research for iSuppli. While the market used to grow in the double-digit percentage range over the past years, Wicht estimates a decline of 3.8 percent for 2009 as a consequence of the heavy downturn earlier this year. In particular, a strong reduction in installations in Spain helped to drive the demand down.
The trend reversal would have been even more pronounced, had not an unexpected strong demand in Germany helped to keep the sales figures up. According to latest figures, German customers are now expected to install some 2.5 Gigawatts worth of solar panels in 2009, up from earlier forecasts of 1.53GW. For the same reason, iSuppli ups its forecast for the global market from 3.9GW to 5.2GW. Globally, Germany represents a share of 48 percent of this market.
Despite the relatively strong demand from Germany, the market still is characterized by severe oversupply iSuppli has reckoned that the supply will exceed demand by 66 percent for 2009. After all, this is already better than earlier calculations, predicting that supply would exceed demand by some 92 percent.
A strong factor for the rebound in Germany is that the market exhibited a high degree of price elasticity, Wicht said. The further development in the market will depend much on the reaction of the industry. Depending on whether the demand will remain high, the solar panel glut could either persist through the year 2010 or it could be resolved earlier. "Supply and demand dynamics in the fourth quarter will set the tone," Wicht said. "If panel makers reduce production during the fourth quarter of this year, anticipating the seasonally weak first quarter in Germany, then supply and prices could stabilize."
In order to maintain the investor momentum in Germany, it will be necessary to reduce the system prices by 10 percent in 2010, Wicht said. Oversupply will ease if the industry would reduce its production output. If it however continues to manufacture at full capacity, iSuppli predicts a 75 percent oversupply for 2010. The market researcher however expects that the manufacturers will reduce their production output.
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