The third quarter of 2018 will be the lowest level of solar PV demand will be the lowest since 2015, according to new figures from GTM Research, due “almost entirely” to China’s recent decision to end its utility solar Feed-in Tariff scheme and cap distributed generation (DG) at 10 gigawatts (GW).
GTM Research published the latest edition of its Global Solar Demand Monitor report which forecasts the lowest quarterly level of global solar PV demand since 2015, resulting in total global solar PV demand for 2018 of only 85.2 GW — after 98.9 GW was installed in 2017.
2018 has been a rocky year for the solar industry with growth in numerous reasons but a recent decision by China’s Government slamming what were once solar forecasts in excess of 100 GW. Prior to China’s announcement in June, estimates were that global solar deployment in 2018 would amount to 106 GW, 104 GW, and 113 GW (depending on which analysts you choose to rely on). However, following the announcement, analysts have been unsure which way to go, with some predicting that global solar demand will simply re-shift away from China but remain high, while others have predicted demand won’t get anywhere near the hallowed 100 GW mark.
China’s National Energy Administration announced earlier this month that the country had already installed 24.3 GW of solar for the year, but with its new distributed energy cap coming into play and a cessation to its Feed-in Tariff, expectations are that China won’t add much more this year — anywhere from 5 GW to 15 GW.
GTM Research, in their Global Solar Demand Monitor: Q2 2018 report, predict that China’s sudden and unlooked-for fall-off will cause global solar demand to plummet in the third quarter, before rebounding by 42% in the fourth quarter as China’s solar market begins to recover and the US experiences its traditional strongest quarterly installations.
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Despite the mammoth drop-off in China’s 2018 demand, as well as historical declines in China and Japan, Asia will nevertheless continue to account for at least 50% of global solar PV installations through to 2020, led by China, India, and Japan, which will account for 20% of the global market through to 2023. North America installations will remain relatively stable and average 16% of global installations through to 2023, while Europe will average 12%.
Strong growth is expected in the Middle East which GTM predicts will triple its share of global installed capacity from 3% in 2018 to 9% in 2023, thanks primarily to growth in Saudi Arabia and the United Arab Emirates which will account for 50% of regional capacity additions through to 2023. Meanwhile, Latin America will account for an average of 7% through to 2023, led by Mexico, Brazil, and Chile, which together will account for 81% of the region’s capacity additions.
While 2018 will be remembered primarily for China’s impact on installations, GTM Research predicts that 120+ GW yearly installations will become “the new normal” from 2020 onwards and, by 2023, we’ll pass the 1 terawatt (TW) mark.
It’s worth noting that, while GTM Research’s forecast for 2018 shows significant drop-off, not all analysts are expecting China’s shifts in solar policy to have such a dramatic impact on the global whole. James Watson from Solar Power Europe told me that they “have remained bullish” and are still “expecting 102 GW this year.”
“We see everyone else downgrading, but I think that they are overestimating the dependence on China. Europe, the US, India, and the rest of the world remain strong and so we see no need to severely downgrade expectations,” Watson said to me via email.
Similarly, though not quite as bullish, Xiaoting Wang, a solar analyst with Bloomberg New Energy Finance (BNEF), explained to me that their “forecast is still more than 95GW for 2018 global PV new build, based on estimates provided by all regional analysts.
“Specifically for China, our most recent forecast is 33–39GW for 2018. (The range was slightly changed, compared with our last communication: 34.5-39.5GW.),” Xiaoting Wang added. “Despite the policy restriction in China, the market there will not be completely quiet in the second half of 2018, thanks to Top-runner program, poverty alleviation program, and some commercial and industrial rooftop projects that do not require national subsidies.”
In the end, 2018 will likely be seen as a real test of strength for the global solar industry. If it can maintain consistent growth — or at least remain relatively stable from a strong 2017 — then it will be good news, as China will not have been quite so necessary to overall growth as some have imagined. However, if by the end of the year global demand has fallen closer to GTM Research’s numbers, over-reliance on China will be the big takeaway.