Solar developers face tight module market in 2018: IHS

Despite significant policy uncertainty in the key US and Indian markets, global solar installations are expected to surge to a record 108GW in 2018, according to IHS Markit – in what would be the first time any renewable technology has cracked 100GW in a given year.

That’s up from a projected 93GW of new solar installations in 2017, itself a new record, the market researcher tells Recharge.

In a sharp turnaround from recent years, global demand for solar panels is expected to be tight in 2018, benefitting module producers and potentially making some planned projects uneconomic.

In one of the most important shifts taking place in the global solar industry, Chinese PV module suppliers are now prioritising their domestic market amid rising prices there, as opposed to aggressively pushing their output into foreign markets – a practice that has resulted in numerous trade disputes in recent years.

The upshot is that there may not be enough modules to supply other markets at the price level developers are counting on.

“Short supply and higher-than-anticipated module prices in the first half of 2018 will impede many markets outside China, due to worsening project economics,” says Edurne Zoco, research and analysis director for IHS Markit.

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“Projects in some regions might be delayed or even canceled because market prices are higher than were estimated during the planning phase,” Zoco says.

The projected 108GW of demand next year is “close to the top end” of what the global polysilicon sector can deliver to PV manufacturers, meaning the upstream industry will be stretched.

The booming 2018 global solar market will be driven in large part by China – by far the world’s largest market and home to many of its top PV manufacturers – thanks to the country’s “strong policy support, successful transition to a more diverse market, and strong momentum in the distributed PV sector”, IHS Markit says in its latest PV Market Demand Tracker.

IHS's forecast suggests solar is on track to continue solidifying its leadership of the global renewables market.

Solar first topped wind in new global installations in 2013, before giving back the title for two years. But it beat wind for the second time last year by a wide margin – 71GW to 51GW, according to the International Renewable Energy Agency – and it appears in position to maintain its lead for many years to come. The world added 30GW of new hydro last year.

Many of the world's largest wind developers have diversified into solar, among them US-based NextEra Energy and France's EDF, although there is still a significant gap between the two sectors. A number of big wind turbine suppliers now openly discuss the benefits of hybridising projects with solar and/or storage.

The biggest-ever year for worldwide wind installations so far was 2015, when around 64GW of new capacity was added, according to the Global Wind Energy Council.