Oversupply leads to big photovoltaic panel cuts

Suppliers of photovoltaic modules have suffered from gross margins falling by more than 25 percent this year.

That’s according to IMS Research, which said there’s a tough price war in the industry with supplier not able to cut costs as much as prices, so eroding the margins.

What’s bad news for the suppliers is good news for the common people though – prices have fallen by 15 percent this year as oversupply continues, said IMS Research.

Polysilicon spot prices fell by over 30 percent since the end of last year but contract prices are stable.  

Chinese tier one suppliers of crystalline PV modules have highly competitive cost structured, said Sam Wilkinson, senior market analyst at the research company. “Margins have already fallen from their peak in the third quarter of 2010. Current pricing levels are putting huge pressure on these suppliers’ margins; we believe their average gross margins could fall below 20 percent by the third quarter of 2011, with tier two suppliers’ margins even lower,” said Wilkinson.

IMS predicts there will be a rebound in demand in the second half of this year.

Gross profits PV - courtesy of IMS Research