Another cycle of PV price declines expected
Recent changes in China's solar policy triggers another cylce of price pressure and industry consolidation according to IHS Markit.
Hard limits on PV installations in China this yearOn 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.
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.