Market research firm IHS Markit has published new figures that show the global solar market will still increase by around 11% to 105 gigawatts (GW) in 2018 despite recent cuts to China’s solar policy that have shrunk expectations for the country’s solar industry.
Earlier this month three Chinese government entities announced a unanimous policy shift to put a cap on all new solar projects in 2018 and to restrict access to the country’s solar Feed-in Tariff (FiT). Specifically, although the country had already installed nearly 10 GW worth of solar in the first quarter of the year, the new policy note dictated that there will be “no new general solar capacity planned” for 2018 except that which is specifically directed towards projects designed to lift poverty in rural areas.
Unsurprisingly, analysts around the world began to quickly reshuffle their predictions for 2018 Chinese and global solar capacity additions. GTM Research and parent company Wood Mackenzie shifted their projections to predict that China’s forecast could drop by as much as 40%, down to 28.8 GW from an original prediction of 48 GW.
Conversely, however, the European solar energy industry association Solar Power Europe is holding steady on another strong year for the global solar industry. Its CEO, James Watson, told me that “Despite the news from China we are not panicking and dropping the expected level of grid-connected solar in 2018 by much – our current estimates suggest we are on track for about 102 GW grid connected in the world.”
It’s worth noting that Bloomberg New Energy Finance is now predicting that the Chinese cuts to its solar policy will have a direct impact on the price of solar modules around the world, which are expected to now fall by around 35% this year, which might in turn help to make up for the lack of capacity added in China.
Confirming another strong year ahead — and, specifically, the possibility of surpassing the 100 GW mark for the first time — market research firm IHS Markit has published new figures taking into account the new Chinese solar policy. Specifically, IHS has cut its predictions for China’s solar industry from new additions of 53 GW down to only 38 GW — with the majority of that installed through the first half of the year.
In a way, according to IHS Markit’s research note, China’s decision was not wholly unexpected. “The sustainability of the market growth levels the industry has enjoyed recently have never been assured,” explained Edurne Zoco, Research Director at IHS Markit for Solar & Energy Storage, “as high levels of curtailment, severe delays in feed-in tariff (FiT) payments, a growing subsidy-budget deficit and an oversupply of electricity have cast doubt on PV demand fundamentals in China.”
That being said, “the timing, ferocity and immediate impact of this latest policy U-turn have taken the global PV industry by surprise,” Zoco added.
IHS Markit has thus also revised its outlook for global solar PV installations down from an original 113 GW down to 105 GW, still over the hallowed 100 GW mark, and 11% higher than was seen in 2017.
China’s decision will likely be held up as a huge factor when we reach the end-of-year figures, but it’s also important to see that the solar industry in Europe is waiting to be told whether the Minimum Imported Price (MIP) will be removed, decisions in India regarding safeguard duties and an anti-dumping investigation, and how the US solar industry will play out in the wake of both China’s recent news but also the January imposition of a 30% tariff on all imported solar cells and modules.
“If the MIP is removed in Europe, the new prices will accelerate installations,” Zoco explained. “In the US market, lower international prices will counteract the 201 case import duties and increase module imports. The precise outcome, in terms of volumes installed, will depend on the appetite of quickly emerging regions to procure modules in the second half of the year or bet on additional price declines. For now, many projects and orders are on hold, with developers and engineering procurement construction firms (EPCs) fully aware that the industry flipped to a buyers’ market overnight.”