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Dienstag, 12. Juni 2018
Another cycle of PV price declines expected
Another cycle of PV price declines expected
6/9/18, 12:29 PM -
China’s solar policy change
triggers another cycle of price pressure and industry consolidation, but
global demand fundamentals remain strong, IHS Markit forecasts.
Sungrow
Recent changes in
China's solar policy triggers another cylce of price pressure and
industry consolidation according to IHS Markit.
„Although photovoltaic (PV)
industry fundamentals remain solid, recent solar industry policy changes
in China will lead to overproduction, price declines and market
consolidation”, Edurne Zoco, research director for solar and energy
storage, IHS Markit says. The IHS Markit outlook for 2018 installations
in China has been cut from 53 gigawatts to 38 gigawatts. Furthermore, as
the majority will already have been completed in the first half of
2018, installations completed in the second half of 2018 will amount to
less than half the number installed in the first half of the year.
Accelerated demand across the world will still only partially compensate
for the reduced outlook in China. As a result, the IHS Markit outlook for global PV installations in 2018 has fallen from 113 gigawatts to 105 gigawatts, which is still 11 percent higher than in 2017.
Hard limits on PV installations in China this year
On
May 31, 2017, the Chinese government announced its “2018 Solar PV
Generation Notice,” which set hard limits on PV installations in China
this year. “This move will force the global solar industry to increase
competitiveness and make up for falling prices, which will only make it
more competitive in power markets worldwide”, Zoco says. China has grown
to become the dominant country for PV technology, both in terms of
installations and the manufacture of PV modules. With 50 gigawatts in
2017, China accounted for over half of all global installations. The
sustainability of the market growth levels the industry has enjoyed
recently have never been assured, as high levels of curtailment, severe
delays in feed-in tariff (FiT) payments, a growing subsidy-budget
deficit and an oversupply of electricity have cast doubt on PV demand
fundamentals in China. Even so, the timing, ferocity and immediate
impact of this latest policy U-turn have taken the global PV industry by
surprise.
IHS Markit
Reshape of the whole PV supply chain
„This
sudden slump in China will reshape the whole PV supply chain.
Supply-chain producers with a significant share of business in China
will be placed under great pressure, causing a fiercely competitive
environment in international markets, which will lead to aggressive
price reductions across the board“, Zoco says.
With most orders on
hold, and both upstream and downstream players still digesting the news
and revaluating their strategies, it is premature to say when prices
will finally settle. At this early stage, the concept of an “average”
price is somewhat meaningless. The final price level will not only
depend on China’s recent decision, but it will also be influenced by
developments around the Minimum Imported Price (MIP) in Europe and
India’s decisions surrounding safeguard duties and the anti-dumping
investigation.
More competitive module prices expected
The
fate of the global PV industry in 2018 is now somewhat sealed. The
remainder of the year will be defined by overproduction and intense
competition among suppliers. In order to cope with these deteriorating
industry conditions, suppliers will therefore focus on keeping
production lines running to generate cash, while controlling inventory
levels. The price war China’s announcement has already set off will
serve to reignite PV demand in regions with pent-up demand, where buyers
have kept projects on hold while waiting for lower module prices. India
and Australia are two markets that will benefit from more competitive
module prices.
MIP price removoal in Europe will accelerate installations
European
markets are waiting for a decision on the MIP in August. If the MIP is
removed in Europe, the new prices will accelerate installations
according to HIS Markit. In the US market, lower international prices
will counteract the 201 case import duties and increase module imports.
The precise outcome, in terms of volumes installed, will depend on the
appetite of quickly emerging regions to procure modules in the second
half of the year or bet on additional price declines. For now, many
projects and orders are on hold, with developers and engineering
procurement construction firms (EPCs) fully aware that the industry
flipped to a buyers’ market overnight.
The next round of competitveness
The
bigger questions now surround the outlook for the next two to three
years. The global solar industry is now forced to take another
significant step to reduce production costs, after a period of relative
stability. The fact that solar is becoming increasingly competitive in
power markets worldwide perhaps offers some light at the end of what is
currently a rather dark tunnel for the PV industry. Solar power is
already the cheapest source of electricity in some countries, and it’s
also the largest energy source, in terms of capacity net-additions, for
the last two years, „Once these lower prices are settled, and the
industry has gone through another wave of oversupply, low profitability
and consolidation, solar energy will become even more competitive across
new markets”, Zoco says. (HCN)
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