IHS Predicts Solar Slowdown & Subsequent Oversupply

Solar PV installations are expected to come to a screeching halt in China in the third quarter of 2016, causing a global slowdown in solar demand, and a subsequent oversupply.

New analysis from the experts in solar PV, IHS, predicts a massive drop-off in solar installations in China during the third quarter of 2016, with an expected drop of 80%. This will in turn trigger a massive global slowdown, which itself will result in a global oversupply of solar PV parts, particularly solar modules.

IHS analysis is showing nearly 13 GW of solar PV installed in China in the first half of 2016, driven by the planned cut to the country’s solar feed-in tariff on June 30, after which the industry will see a significant slump. Given China’s importance and share of the global solar PV sector, it is unsurprising that there will be a global trickle-on effect when China’s demand drops off the cliff.

Though installations are expected to recover somewhat in the fourth quarter, the Chinese government’s desire to ensure solar installations stay under 20 GW for the year will hamper any real progress.

These developments in China, according to IHS, will “trigger a sharp adjustment in pricing.” The solar module chain has already seen pricing drop sharply for products shipping in the second half of 2016, with prices significantly below those sold in the first half of the year. According to IHS, “Prices for Chinese tier-1 modules shipped to China will range from $0.44 per watt to $0.46 per watt (excluding value-added taxes) in the second half of 2016. Prices as low as $0.43 per watt for multi-crystalline modules were quoted at the recent SNEC PV Power Expo show in Shanghai.”

Thus, solar module suppliers will be selling at a net loss in China.

Click here for IHS’s full analysis.