But policy changes in China mean significantly lower short term demand for PV than previously expected, according to gtmresearch
Global solar capacity is expected to pass the one terawatt mark by 2023, although recent policy changes in China have led to a significant downgrade of installation forecasts in the short term, according to the latest quarterly PV market trends report by gtmresearch.
Released yesterday, The Solar Market Outlook Update for Q2 report estimates the three key markets of China, India, and Japan will account for the largest chunk of the global solar market through to 2023, with Asia as a whole accounting for at least 50 per cent.
North American and European installations, meanwhile, are expected to remain relatively stable at an average 16 per cent and 12 per cent market share, respectively.
One the biggest market expansions is expected in the Middle East, which is set to triple its share of the global installed PV capacity from three per cent this year to nine per cent in 2023, while Latin America will account for an average of seven per cent over the same timeframe, the report estimates.
However, the recent decision made by China’s National Energy Administration to terminate any approvals for new subsidised utility-scale PV power stations in 2018 has “significant ramifications for the global PV market”, according to the report.
It means expectations for Chinese PV demand this year has fallen from 48.2GW to 28.8GW, with China now likely to install 141GW between now and 2023 compared to previous estimates of 206GW.
“China will adapt to a new market reality – one where auctions and possibly subsidy-free PV are the key drivers of large-scale PV projects,” the report states. “Annual installations of 20-25GW will be the new normal for China, rather than 30-40GW.”
As a result, short term forecasts for global PV demand have also fallen this year from 85.2GW to 103.5GW in gtmresearch’s pre-policy change forecasts.
But as China’s market slows, module prices are expected to fall more rapidly as a result of increased oversupply, which could in fact boost installation in other markets – particularly Europe – although the benefits may not be realised until 2019.
“The European market is strengthening due to a combination of factors: increased auction capacity to ensure legally binding 2020 EU renewable energy targets are met; a recent agreement on a legally binding target for of 32 per cent renewable energy supply in 2030; and in a lower module price environment, more markets are likely to reach the tipping point where the economics of unsubsidised PV make sense within our forecast horizon,” the report explains.
However, markets such as the US and India are less likely to benefit from these lower module prices due to import tariffs that have been put in place this year, the report concludes.
Nevertheless, gtmresearch contends that after 2019 around 120GW of global solar installations per year will become “the new normal”, meaning the world is expected to pass the 1TW installed capacity mark by 2023.
The update follows recent BNEF analysis which estimated global wind and solar installations combined passed the 1TW mark in 2017.