Decline in key markets to shape global PV demand

Article By : EE Times Asia

The world’s three largest PV markets—China, United States and Japan—are expected to shrink by a combined 9GW in 2017.

Global demand for photovoltaics (PV) is forecast to reach 79GW in 2017, a slight 2% increase over the 78GW installed last year, according to market research firm IHS Markit.

This year's growth is sluggish compared to the annual growth that surpassed 30% in both 2015 and 2016, with analysts saying the anticipated decline in the world’s three largest markets—China, United States and Japan—will shape the outlook for PV demand through this year. IHS Markit expects these markets to shrink by a combined 9GW (16% year-over-year) in 2017.

Similar to previous years, global demand depends highly on policy evolution in China. Last year, China installed 31GW of PV, of which 35% was in the second quarter prior to the FiT reduction in mid-2016. China’s FiT scheme for 2017, allowing a grace period until 30 June 2017 for permitted projects to obtain the 2016 tariff, sets the stage for another strong second quarter, albeit smaller than the previous year. IHS Markit projects China to contract by 16% and install 26GW in 2017, unless policy announcements later this year set off a new wave of installations.

Meanwhile, the United States installed 15GW in 2016, as projects were required to be completed by the end of the year. There is uncertainty regarding 2017 demand, and IHS Markit anticipates a 3GW decline, mainly in the utility-scale segment.

Japan's PV demand shrunk by 23% year-over-year in 2016 as a result of FiT reductions and limited grid access for new projects, according to IHS Market. Japan is expected to decline by another 10% in 2017 to become the world’s fourth-largest market.

At projected 10GW of installations, India is set to take position as the third-largest PV market in 2017. However, significant challenges remain, including access to land and financing. The rollout of a goods-and-service tax could increase prices in third quarter 2017.

This year, the four largest PV markets will represent nearly three-quarters of global PV demand, according to IHS Markit. Even as smaller markets grow on the back of declining module prices, their growth will not be enough to counterweigh impact of demand fluctuations in the largest markets.

Through 2021, IHS Markit projects a total of 450GW of new PV installations globally, implying a 141% growth in cumulative installed PV generation capacity.

Figure 1: Annual global PV demand is on track to hit 100GW by 2021 (Source: IHS Markit)