Published on March 21st, 2014 | by Guest Contributor


Solar PV Market May Increase To 500 GW By 2018

March 21st, 2014 by  

Originally published on RenewEconomy.
By Sophie Vorrath.

The global solar PV industry is headed into a five-year growth spurt that will put it on track for cumulative installed capacity of 500 gigawatts (GW) by 2018, according to the latest NPD Solarbuzz Marketbuzz report.

The report, released on Thursday, predicts a huge 100GW of solar PV deployment will be targeted in 2018 – a boom in end-market growth that is projected to increase annual PV module revenues to $50 billion in that same year.

In January, leading investment house Deutsche Bank also dramatically lifted its near-term demand forecasts for the global solar industry, predicting that 46GW of PV would be installed across the world in 2014, and 56GW in 2015.

Last year, PV developers installed 37.5GW of panels worldwide – a 22 per cent increase on 2012, despite the lingering hangover of global overcapacity and declining operating margins. According to data compiled by Bloomberg, that figure may increase as much as 39 per cent this year, as surging demand in China helps to soak up the glut.

China, which surpassed Germany to become the world’s biggest solar market in 2013, has been forecast to install more than 14GW in 2014, after adding a record 12GW of solar power in 2013, compared with 3.6GW a year ago, according to Bloomberg New Energy Finance.

NPD SolarBuzz says it also expects this strong demand to further stimulate revenues for the industry’s manufacturers, with PV module revenues of more than $200 billion available over the five year period from 2014 to 2018.

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“Solar PV module prices declined faster than the end-market grew in 2012, leading to a dramatic decline in revenues,” said Michael Barker, senior analyst at NPD Solarbuzz. “This imbalance was corrected during 2013. Over the next five years, end-market growth will exceed forecasted price declines, resulting in a strong rebound in module revenues.”

The average price of PV modules is also expected to decline moderately, according to NPD SolarBuzz, falling to $0.51 per watt (W) in 2018. System prices, too, will decline each year, driven by cost reductions in balance-of-systems components and economy-of-scale improvements enabled by project developers and installers, says the report.

“Solar PV suppliers are benefiting from a less volatile pricing environment, compared to previous years,” said Finlay Colville, vice-president of NPD Solarbuzz. “The industry will soon transition to a phase of profitable growth, with solar PV competing directly with traditional forms of energy.”

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  • The title of this article is misleading. The term ‘market’ can only refer to annual sales, not cumulative installed capacity. There is a difference, but my guess is the author knows it.

  • There is adequate capacity, around 60GW. Overcapacity has been the industry problem since 2011 or so. The general expectation is that PV panel prices will rise a bit to restore industry profitability. BOS may still fall but interest rates are projected to rise so overall utility system costs are likely to be stable near current levels for a while. The real constraint is amount of subsidy. China rescued the panel business last year by subsidizing installs in China. At the same time favorable subsidy regimes in Japan and the US offset subsidy declines in Europe. This projection seems pretty linear and does not project a blip in 2016-2017 (as others do) when the US subsidy declines. If prices stay level than subsidies need to grow in step with the capacity growth. I don’t see much worldwide appetite for more subsidies. China has rescued the panel business, but that may be as far as they want to go. As Bloomberg has reported, overall green tech investment has declined from $318B in 2011 $254B last year and is projected to continue doing so going forward. This rate of PV capacity growth does not seem too unreasonable, but gets suspect further out, especially after 2016 unless the world appetite for increasing subsidies returns.

    • Matt

      Or maybe to world appetite for a price on carbon will increase. Also for places like India, where the air is already unsafe, and they can’t dig their coal out fast enough to feed more plants, and can’t afford the cost to import it. Their demand for PV and wind will grow a lot. India has almost as many people as Africa without power. PV and micro grids in all those isolated location is easier/cheaper than lots of transmission and centralized coal plants.

    • JamesWimberley

      You need a lot of things to fall just so to construct your consistent but improbable scenario. Stable panel prices: with the cost reductions the first-tier producers are achieving (Jinko is below 50c/w) and their plans for new capacity – presumably highly efficient gigawatt fabs? China slows down installation growth: in spite of regime-threatening smog? Japan raised pv subsidies after Fukushima – but the US did not, and demand still grew fast.

      Where do you get “the world appetite for increasing subsidies”? In the world I live in, they are being cut or phased out everywhere except Japan, because declining costs are making them unnecessary.

      SFIK it’s not Bloomberg predicting further declines in global green tech investment, only you.

      • Bloomberg:

        Declines in PV panel prices and system costs led to current subsidies and incentives in the US making projects in sunny locations profitable investments in 2013 Examining the financing details of PV developments shows the federal and state incentives are funding over 50% of capital costs. The ITC reduces substantially in 2016.

        China is only installing PV because the government introduced subsidies. It introduced subsidies to rescue a business that faced disaster with the decline in Europe. Its a lot cheaper to clean up the coal plants to the US level than install PV and that is what they are doing. Economic growth in China is declining and they are facing the bill for over investment in capacity in lots of industries including PV.

        PV in europe declined drastically when FITs were reduced.

        PV costs are not PV prices. Cost of $0.50/W should have prices at about $0.65/W.

        The industry is stabilizing. Poly is up to over $20/kg from $15/kg and new plants are coming on line. All of this is good news, but it does not foretell an imminent further decline in PV prices.

        • Bob_Wallace

          You might want to ask why the government introduced subsidies for solar. Just to keep manufacturers in business? I doubt it.

          China has transmission problems. It needs new transmission for wind and nuclear. Distributed solar needs no transmission, it gets installed at the neighborhood level and takes demand off overloaded lines.

          Solar is butt-simple to install. No need for trained people like are needed for large wind farms and new reactors. Any experienced builder can become a rooftop solar installer with only minimal training. That means that very large amounts of solar can be installed very quickly. Solar can quickly add generation in out of the way places that are likely using expensive diesel generators.

          BTW, it seems like China’s coal fired electricity plants are not a major contributor to their smog problem. That’s due mostly to hundreds of thousands of coal furnaces and cars.

  • Banned by Bob

    Does anyone know if there are any constraints on the production side to meeting these projections? Is there sufficient production capacity to make sure that this or more happen?

    • Matt

      That depends on the assumptions you make. Do you think that current plants will increase to their max cap, or stay at current level. Do you think additional cap will be added if there is money to make.What with the close plant that were no making money, I bet you would have trouble making 100GWs of panels this year, without a price increase. But 2018 gives some time to ramp up.

    • Omega Centauri

      It used to be claimed that PV was dependent on certain rare elements, such as Silver or Indium. But I think these were being used as the best current solution, not as something that was absolutely required by the technology. As scarcities of some specialist components bid up their prices, I think the industry will substitute other materials. I think the challenges will come more on the usage side of things, as levels of penetration grow, the challenges of integration into the grid become greater.

  • JamesWimberley

    40% annual growth in installations (no revenues) is the historic trend for the industry. 2014 is nothing exceptional, only a reversion to the norm. The burden of proof isn’t on Solarbuzz, it’s on those like the EIA (and, less absurdly, the IEA) who think that the boom must slow down. Why should it? An end to cost reductions in manufacturing and BOS? A shortage of some crucial raw material? A shortage of land? An amazing breakthrough in the cost of nuclear power? A political backlash funded by desperate incumbent fossil fuel interests using dirty tricks? Well, the last has some credibility. There is such a campaign – but it’s losing in most places.

    • Bob_Wallace

      A few years back a 30% subsidy would lower $4/watt solar to $2.80/watt.

      Now utility scale solar is around $2/watt.

      If we installed a lot of solar at a subsidized $2.80 why does the EIA and IEA think we’ll install less at $2?

      • Certain people have been put in governmental leadership positions solely to usurp our government for the explicit purpose of benefit to entrenched corporate interests?!

        • Omega Centauri

          I fear you are right. Either that or they have very little brainpower.

      • sault

        And they somehow think that fossil energy prices will magically stay constant or that we will hardly take any action to prevent climate change too. It’s all in the name of preserving the value of the trillion$$$ in fossil energy reserves the major players in the energy sector have in the ground. The clean energy revolution will chip away at the value of these reserves (which are REAL assets they can borrow against or use to prop up their credit rating!) until they are worth less than their extraction costs. Therefore, their buddies in the EIA / IEA must keep the charade going for as long as possible so they can get what they can while the gettin’s good.

    • juxx0r

      The maths dictates that it has to slow down eventually, (in 14 years we’ll produce 111% of the worlds energy from solar at that growth rate). Economics dictates that it will slow down before then. But both those eventualities won’t impact the near term.

      • JamesWimberley

        “Economics dictates that it will slow down before then.” Why? You may be right. But it’s entirely possible for a new technology to take over completely. How many horse buggies were sold in the USA in 1940? You get a slowdown just before saturation, in the classic S-curve of technology adoption.

    • Omega Centauri

      If I take their numbers, I get a compond growth rate of a tad over 20% per year.

      I can think of reasons why the boom may slow down. At least in some hot markets, saturation. Th german market slowed down, and I think this is partly a reaction to the high penetration, and the desire to slow the rate of change to enable the grid to adapt. The hot US market, is California, and already daytime demand (CAISO has a new graph “net” demand, which they define as demand minus variables renewables (wind and sun), and cool weather adytime demand has been flattened already, there are now two peaks, at roughly sunrise and sunset. Before long the cool-weather daytime demand will fall below nighttime demand). So pressures to slow the buildup will develope in some hot markets.

      Now I think other new markets are going to more than make up in someslowdowns in some of the previous hot markets. And storage would help revive the formally hot markets that are feeling the effects of absorbing so much variable generation. Thats why I think Deutsche bank’s estimate of 20% growth is more reasonable than 40%.

      • JamesWimberley

        You get 44% trend annual growth simply fitting an exponential regression to the installation data since 2000 according to EPIA. Spreadsheet linked to in this post of mine:

        • Omega Centauri

          My 20% number was arrived at by looking at the logarithm of the BD forecasts. So they are forcasting a slowing of the exponential growth rate. So obviously the bank is forecasting a “slowdown”. DB forecasts much more PV growth than the IEA’s Worls Energy (WEO), which always assumes an true (decrease in the year on year additions). Even the WEOs 450scenarie, which they claim is unlikely is lower than DB.
          We will see.
          I think 20plus percent would be good. The industry is getting big enought that really fast growth could be difficult.
          Note 20% (instantaneous growth) works out to 22% year on year due to compunding effects, and a doubling in 3.3years.

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