Global solar construction and development growth is slowing as countries enforce unprecedented Covid-19 lockdowns, according to analysts at Wood Mackenzie who cut their 2020 PV installation forecast by 18%.
The analyst group has downgraded it forecast for PV installations for 2020 from 129.5GW to 106.4GW. “Next year will also be a challenging one for solar,” warned WoodMac principal solar analyst, Tom Heggarty.
“We assume that economic damage caused by the coronavirus pandemic and concurrent crash in oil prices will tip the world into recession in 2020.”
Heggarty said that although it expects a strong economic recovery next year, that solar projects which should be delivered in 2021 are being developed and financed today. Therefore when the recession hits, not all such activity will go ahead as planned.
“Demand destruction will be offset to some degree by the spill-over of delayed projects from 2020 to 2021. Nonetheless we have reduced our 2021 forecast from 127.2GW to 123.6GW, down 3%.”
Heggarty said the impact of the disruption caused by the pandemic will vary by country. In China – the initial epicentre of the outbreak – economic indicators suggest a recovery is underway. “Wafer, cell and module production is ramping back up towards full capacity and construction at many project sites has resumed.
“We don’t expect that the impact on the Chinese PV market - either upstream or downstream - will continue beyond the end of the second quarter this year. In contrast, in Europe and North America, lockdowns in some form or another are likely to last well into the second quarter and possibly into the third.
“Other regions such as Latin America and Africa have – as yet – been less affected by the coronavirus outbreak. Nonetheless we anticipate severe disruptions in these regions too as we move towards the middle of the year.”
Different sectors of the market will be impacted differently as well. In-construction utility-scale projects will be the first to feel the pain as lockdown measures delay or halt progress. For projects at such a late stage of development, however, we should be mostly talking about interconnection delays rather than cancellations, Heggarty said.
However, the picture looks more challenging for earlier stage development. “Auctions are being delayed, PPA negotiations halted and permitting is slowing down. Weak power prices and collapsing forex trading rates are severely damaging the economics of new investments across a wide range of countries. Projects that were slated for 2021 will be tougher to bring to market on time, if they make it at all.”
Several analyst groups and the IEA itself have expressed concerns in recent weeks that the collapse of global oil markets could lead to capital-constrained energy companies rethinking their pledges to transition to clean energy.
Rystad Energy forecast that the growth of commissioned renewables projects will now be “wiped out” worldwide this year, slashing its pre-coronavirus prediction to a “flat growth” total of 126GW of PV and 71GW of wind capacity, and paring back it expectations for 2021 by a further 10%.
Bloomberg New Energy Finance is slightly more sanguine, trimming its 2020 global solar outlook from 152GW to 143GW, and saying the wind sector faces “considerable downside risk” to the 75.4GW it forecast in December but still in line to have a record year for new installations.