By Josefin Berg, research manager, solar & energy storage research group at IHS Markit
Key Takeaways
- IHS Markit has raised its forecast for global PV installations in 2017, now predicting 90 GW – a 14 percent increase from 2016. The biggest changes are seen in China, now predicted to install 45 GW in 2017.
- The boom in demand in China is consuming a large proportion of the global PV module supply, leading to increased prices and lead times that extend into 2018. This has weakened the short-term outlook in some major markets outside of China.
- The shortage of Chinese modules is not impacting the supply in the United States as heavily as other regions, as the current rush to procure modules ahead of any potential trade action (resulting from the Suniva petition) focuses on securing tariff-free modules manufactured outside of Taiwan and China.
Significant upward revision to 2017 installation forecast
IHS Markit has made a significant upward revision to its forecast for installations in 2017, now predicting global installations to reach 90 GW – a 14 percent increase from 2016. The biggest changes are seen in China, where both positive revisions to policy support, a larger-than-previously-anticipated first-half of the year, and strong installations activity continuing into Q3 2017 have moved IHS Markit to raise its forecast for installations in the country to 45 GW in 2017.
Based on analysis of official connection statistics, as well as inverter and module shipments, IHS Markit estimates that 26 GW of installations were completed in in China the first half of 2017, and a further 12 GW will be installed in Q3 2017. Previously, it had been predicted that installations would peak in Q2 2017 due to the grace period allowing projects to receive the 2016 FiT ending on 1st July 2017, before declining in Q3 2017. However, recently-released PV connection data from the China Electric Council (CEC) reported that 34.9 GW of PV had been connected in China by the end of July (11.3 GW in July alone), indicating that installations had in fact continued into July and the Q3 2017 decline will be far softer than previously anticipated. IHS Markit’s revised forecast for installations in China in 2017 assumes that this official connection figure may not include several GWs of projects that may have been installed but not connected at the end of that period.
Impact of China’s booming demand
However, this exceptional boom in demand in China has consumed a huge proportion of the global PV module supply, leading to increased prices and lead times that now extend into 2018. The latest installation forecast implies that the PV module supply chain is at the very upper end of what it can produce within a year. In reality, the final number of module shipments for 2017 is likely to be limited by the supply of polysilicon. chain. As a result of the tight supply, projects are being delayed and the short-term outlook in regions such as Japan, India and Latin America has been reduced. IHS Markit has cut its forecast for installations outside of China in 2017 by 7 GW.
The outlook in the United States is not as heavily impacted as other regions as the current rush to procure modules ahead of any potential trade action resulting from the Suniva petition focuses on securing tariff-free modules manufactured outside of Taiwan and China, which are unlikely to be used to serve demand in China market. As the price of tariff-free modules has been driven upwards by the rush, it is an attractive market for suppliers, who are prioritizing supplying modules here over other markets.