SOLAR developers and investors may have to brace themselves for solar panel costs to start rising after a 30 per cent plunge last year. The period of ultra-cheap solar panels is over, according to the president of one of China's largest solar panel manufacturers.
The party is definitely over, Eric Luo, president of China's GCL System Integration Technology, told Reuters recently, commenting on the super-cheap solar components on the global market.
According to the Chinese manager, solar panel prices have already stabilised and are expected to rise by 10-15 per cent within two years.
Despite the expected higher costs for solar installations, the global solar industry will continue to add generation capacity this year, and China, the United States, and India will drive the market, analysts say.
It was China that triggered the massive drop in solar panel prices last year, surprising everyone in June 2018 by announcing that it would not issue approvals for any new solar power installations in 2018 and would also cut subsidies.
The major shift in Chinese solar policies led to local manufacturers flooding the global solar panel market, creating a glut and pushing prices down.
As a result of this, solar panel prices plunged by 30 per cent in 2018. While this jeopardised smaller Chinese manufacturers, the ultra-cheap solar panels created a windfall for solar developers and investors in solar photovoltaic (PV) installations around the world.
The market, however, has started to adapt to these disruptions and prices of China-made solar panels are expected to rebound by 10-15 per cent over the next year or two, because the Chinese solar manufacturing market is heading to consolidation as small producers suffered the most from China's solar policies, Luo told Reuters.
The solar market globally is set to gradually adapt in 2019 to the industry disruptions last year, which also included the US slapping tariffs on imports of solar panel products. Together with continued declines in solar and wind costs, 2019 could be a brighter year for the US solar and renewable energy markets, analysts and industry professionals say.
Jenny Chase, head of solar analysis at BloombergNEF, said this month: "2018 was certainly a difficult year for many solar manufacturers, and for developers in China. However, we estimate that global PV installations increased from 99GW in 2017 to approximately 109GW in 2018, as other countries took advantage of the technology's fiercely improved competitiveness."
BloombergNEF expects global PV installations this year to rise by 17 per cent from 2018, with three key markets driving demand - China, the US, and India. Those three markets are expected to account for 52 per cent of global installations in 2019, Bloomberg NEF's Pietro Radoia said last week. In China, despite the restrictions on new-build solar capacity, developers are still busy and planning to build subsidy-free projects, Radoia noted.
China also plans to only approve new solar and wind power capacity if it matches the country's coal benchmark on price.
In the US, the tariffs on imported solar cells and modules created uncertainty in the market in early 2018, resulting in quarterly additions of utility-scale solar dropping in Q3 2018 below 1 GW for the first time since 2015, according to Wood Mackenzie Power & Renewables and the Solar Energy Industries Association (SEIA).
"We did, however, see utility PV procurement outpace installations fourfold in Q3, showing that despite the tariffs causing project delays, there is substantial growth ahead for the US utility PV sector," said Colin Smith, senior analyst at Wood Mackenzie.
In its monthly Short-Term Energy Outlook (STEO) issued recently, the EIA forecast that the US will add nearly 5 GW of utility-scale solar PV capacity in 2019 and another 6 GW in 2020.
In 2019-2020, the EIA also sees almost 9 GW of small-scale solar PV capacity installed, mostly in the residential sector. The share of renewables excluding hydropower of US electricity generation was 10 per cent in 2018 and is forecast to rise to 11 per cent this year and to 13 per cent next year.
In the long run, the renewables share, including hydropower, is set to increase from 18 per cent in 2018 to 31 per cent in 2050, driven largely by growth in wind and solar generation, the EIA's Annual Energy Outlook 2019 with projections through 2050 showed.
"Renewables grow to become a larger share of US electric generation than nuclear and coal in less than a decade," the EIA reckons. OILPRICE.COM