Following China’s sudden decision to cap its solar additions in 2018 late last month, Taiwan-based market research firm EnergyTrend has revised its forecast for the country’s solar capacity additions this year, and subsequently lowered its global forecast from 106 gigawatts (GW) to between 92 and 95 GW.
China shocked the solar industry in late April with a combined announcement by the National Development and Reform Commission (NDRC), the Ministry of Finance, and National Energy Administration (NEA), detailing a cap on new solar projects for 2018 and a reduction in the country’s Feed-in Tariff (FiT). The move was made to curtail oversupply in China, and has subsequently wrought havoc with analyst predictions for China — and the world’s — 2018 global capacity additions.
As such, market research firms and analysts have been scurrying to revise their forecasts for 2018.
GTM Research and parent company Wood Mackenzie announced in early June that it expected China’s policy shift could cut expected capacity in the country by 20 GW, and now expects China to install only 30 GW. A few days later, IHS Markit shifted its forecast for China down from 48 GW to only 28.8 GW — most of which has already been installed thanks to a terrific first quarter and an existing pipeline, with the remainder likely to come from the exception to China’s new policies, those solar projects which are designed to lift poverty in rural areas.
IHS Markit, however, didn’t necessarily think this was going to cause a cataclysmic shift in its global forecast, which it only downgraded from its original prediction of 113 GW to 105 GW — remaining above the 100 GW mark, which would be a first, and remaining 11% higher than 2017.
Similarly, the European solar energy industry association Solar Power Europe believes that China’s policy shift won’t devastate its forecast, and 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.”
In a way, some analysts predict that China’s sudden escape from 2018 capacity additions will free up a significant amount of solar product that will drop in cost, potentially opening up previously-unopened doors and opportunities.
Joining the fray of analyst firms revising their forecasts, Taiwan-based EnergyTrend, a division of TrendForce, now estimates that China’s solar capacity additions for 2018 will amount to between 29 and 35 GW, with a specific prediction of 31.6 GW. This will allow China to maintain its position as the dominant solar country in the world but will decrease global capacity additions in 2018 from 106 GW to between 92 and 95 GW — adding that it won’t exceed the 100 GW mark until 2019.
EnergyTrend expects Europe, South America, and Australia to all experience increased demand this year, while India will also see growth but will be impacted by uncertainties in policy and investment. The company also expects oversupply for solar manufacturers to be particularly severe this year, with costs expected to see continuous decline this year. In addition, EnergyTrend expects the oversupply to push module suppliers to seek overseas markets which will in turn reduce the average prices of solar PV modules in the global market, weakening the United States’ protection of domestic suppliers by its Section 201 trade case which resulted in a 30% tariff on imported solar cells and modules.