Stay tuned !
Receive our latest news and publications by subscribing to the PV Market Alliance newsletter
The PVMA Global PV Market Report is the 2nd release of a 5 years global PV market outlook study produced annually by the PV Market Alliance. The PVMA Global PV Market Report is probably the most reliable global market analysis available to date but also an indispensable planning reference for PV stakeholders from all over the world willing to drive their business on advanced market intelligence.
By Gaëtan Masson, Director @ Becquerel Institute
The word “reasonable” never really applied to the PV sector and 2016 is not going to change this state of facts. The 10 years of market and industry development have been marked by a series of market booms and failures, companies growing faster than light and going into bankruptcy before one could notice, and forecasts being beaten one after the other. When some imagined a market rapidly growing, the market stagnated more and more often.
China über alles
2016 does not escape these PV rituals and while the global PV market seemed to be finally under control, with a reasonable growth rate coming from developing markets, the surprise came from China, again. With enough installations in the first two-quarters to beat any other country, China will push the global PV market indicators into the range of 65-70 GW (according to the latest report from the PV Market Alliance) this year. Coming from 50 GW in 2015, the growth is so significant that it might have surprised many spectators.
It also seamed that the years of unforeseeable PV growth rates were apparently behind us and with an evolving market the industry could finally manage its future without the chaotic events that we experienced in the last decade.
Now it appears that the Chinese PV market probably will have trouble to keep the high level of installations that were scored in 2016 and we can expect a downturn in 2017.
A wearying Chinese market could unassumingly bring the PV market down to a level below the one that could have been expected in 2016 without the Chinese boom, by an order of magnitude, and below 60 GW.
The declining PV market, the complex situation in Europe, and a decreasing market in China won’t be compensated by the expected growth in the US (but will it last until 2017?), India, and other emerging countries. This unfortunately could postpone most capacity expansions for the near future.
0,38 USD/Wp. And this might not be the end
The real-world characteristics of living in an open globalized market can be resumed easily as the market always understands the future better than most analysts. In that respect, the current price decline for PV modules that has been seen from Q2 2016 is, unfortunately, confirming the fears of over-capacities in the PV market.
In April 2016 at the SNEC PV Power Expo in Shanghai, the lowest official prices reported for PV modules were still above the 0,45 USD/Wp mark. One could object that cheaper modules were available but this level was at least compatible with announced production costs below 0,40 USD/Wp from most of the competitive players with less sustainable margins.
While 0,38 USD/Wp has been recently reported, the low range of prices is now sinking below the production costs of several tier 1 players. This is alarming to know because even the most competitive producers might have difficulties to make a reasonable profit at this price level. This is especially import since when the average prices were around 0,43 USD/Wp this was also tough for an industry that just came out of a strong consolidation process and had some key players are still struggling with their profitability.
Interestingly, 0,38 USD/Wp as a minimum price for PV modules tends to confirm the hypothesis of a steeper-than-expected price learning curve for crystalline silicon modules. Of course, during consolidation times, with reduced demand, the long-term learning curve doesn’t really indicate the future anymore but it tends to confirm that the PV industry costs went down faster than expected due to different economical conditions in Asia. In the same way, at least two major players in the top 10 announced recently that they could be able (the conditional is essential) to produce around 0,25 USD/Wp at the horizon 2020.
From a market point of view, the price decline is always a good hook for further growth. Except in this case the market inertia (or policy inertia) doesn’t provide new markets to open soon enough to influence the prices upwards. The conditions for unlocking new PV markets, ensuring a stable development framework allowing them to live long and prosper, require more time than what would be needed to counterbalance the price decline, and the new overcapacity.
Analyzing the price evolution for multicrystalline materials within the last few months, the price of polysilicon remained rather stable and increased slightly. But, and this is more interesting, the price of wafers went down dramatically in the April-September 2016 period, with reported prices going down occasionally by 40%. The same could be seen for cells with lower decline rates and of course, modules, as explained.
This pricing instability will put tremendous pressure on non-vertically integrated manufacturers and could reshape completely the PV industry in the coming months and years.
So far, 2016 is bringing many interesting wonders and 2017 might be even more surprising. The good news is this might be a new turning point, with an increased competition, and careful actors looking for market share and profitability. In other words, difficult times ahead for innovation, equipment sales, and B2B business in the PV sector, globally but only death and taxes can be expected forever.
Jokes are expected on April 1st, not one month later: the announcement from DEWA, the Dubai Energy Authority, that a bid at 0.0299 USD/kWh was received looks so weird that it might be considered as a pure joke. Or a provocation. Recent tenders showed extremely low bids without financial incentives, and especially the Peruvian one at 0.048 USD/kWh. The question in Dubai is even more interesting that it follows the previous tender that was won with a bid at 0.0585 USD/kWh. Can we figure out the LCOE of PV going down so fast in less than two years?
A simple LCOE modelling shows that such low LCOEs are reachable with the solar irradiation in Dubai under very strict conditions. Low cost of capital (below 4%), a yield around 2000 kWh/kWp, low OPEX costs and of course, the most important to date: CAPEX around 0.7 EUR/Wp. While challenging, all these numbers are achievable under conditions of a high quality installation and a long lifetime. Unfortunately, so far, a part of failures of PV components in the field have been associated to an unskilled workforce, leading to defects in installation and/or maintenance. As a result, this raises questions about the viability of extremely low CAPEX and OPEX costs.
Hence, the conclusions for the development of the PV industry are extremely attractive for several reasons. First, because realistic or not, the recent tenders are all going in the same directions: costs are compressed in order to make PV increasingly competitive. From 3 to 6 USDcents/kWh, PV becomes virtually competitive with almost all clean sources of electricity on earth.
Secondly, even if the components costs implied in such low tenders cannot be replicated for all PV installations – margins are extremely reduced, but still in most cases positive for modules and BoS manufacturers – it shows that the development of PV in developing countries can benefit from lower workforce costs, and in the Dubai case, it could be a genuine explanation of dramatically low CAPEX.
Thirdly, PPAs are not the end of the story. An interesting business model could consist in bringing a PV plant online as soon as possible with a low remuneration fee guaranteed by the PPA and decide to sell part of the production on the electricity markets (or to electricity consumers) once it could become more attractive than the PPA.
DEWA’s decision about the winning bidder will be examined by all electricity providers of all available sources, not only PV ones. Would the 0.0299 USD/kWh be validated, it would trigger a complete change of mindset in the Gulf region… and actually worldwide. 0.0585 USD/kWh was a warning shot, going below 4 cents would be the signal that the end of the fossil fuel era is getting closer than ever. But before congratulating ourselves, one will have to confirm the realism of the 3 cents proposal!
Brussels, 15th June 2016:
The PV Market Alliance releases today its second annual Global PV Market Report.
According to the PV Market Alliance (PVMA), global PV markets should grow by approx. 20% during the next two years, reaching at least 60 GW in 2016 and more than 70 GW in 2017 following its medium scenario. Although a significant level of uncertainty prevails, PVMA anticipates that market demand will remain bullish, mainly driven by a continued strong growth in China, India, the USA, and several emerging markets. In contrast, Japan will see its market slightly decreasing after the record 11GW last year. Similarly, in Europe, after a slight market increase in 2015 due to the temporary UK boom, the entire European market is expected to return to pre-2015 levels.
Long-term Outlook: Although subject to a significant level of uncertainty, the global PV market is likely to grow to around 100 GW of annual installations by 2020, and possibly even up to 123 GW in the most optimistic scenario.
Combining an intimate knowledge of the market with thorough understanding of policy developments in both mature and emerging PV markets, the PVMA’s report constitutes one of the most reliable global PV market analyses available to date. Covering an in-depth regional perspective and detailed analysis of more than 40 individual PV markets, the report provides comprehensive insights allowing understanding and anticipating future PV global market developments.
Note to editors
The “PV Market Alliance” was established in 2014 and groups well-known regional PV and CPV experts from China, Europe, Japan, Latin America and the US, covering the global PV market.
The “PV Market Alliance” includes:
The PV Market Alliance (PVMA) estimates photovoltaic installations of at least 51 GW in 2015, perfectly in line with its last year report forecast, and short of most too optimistic expectations.
After 40 GW of PV installations in 2014, a confirmation of PVMA last January early estimate, 2015 experienced a significant growth with a market reaching at least 51 GW, exactly matching last year PVMA central scenario forecast. Strong growth was observed in all major markets while more emerging market started to contribute to the global growth.
The PV Market Alliance uncovers today the first release of its annual PV Global Market Report.
According to the PV Market Alliance, global PV markets will grow this year close to 50 GW, fuelled, as in 2014, mainly by growth in China, Japan, the USA and some emerging countries. European markets are expected to stabilize after the steep decline observed since 2011, while India’s potential will start to impact the global market.
The PV Market Alliance estimates photovoltaic installations of 40 to 42 GW in 2014 after final numbers for 2013 were revised down to 37 GW.
After 37 GW of PV installations in 2013 (below the 40 GW figure announced earlier due to lower final Chinese figures), 2014 experienced a moderate growth with a market stabilizing above 40 GW and up to 42 GW, depending on actual Q4 installations. Emerging business models that engage electricity consumers are driving a resurgence of distributed generation PV installations worldwide even as utility scale deployment continues to drive installations. Strong progress was observed in several regions, including Asia, North and Latin America and South Africa.
Find here a short video presenting the concept of Solar Roadways
By Gaëtan Masson, Director @ Becquerel Institute The word “reasonable” never really applied to the PV sector and 2016 is not going to change this state of facts. The 10 years of market and industry development have been marked by a series of market booms and failures, companies growing faster…
Jokes are expected on April 1st, not one month later: the announcement from DEWA, the Dubai Energy Authority, that a bid at 0.0299 USD/kWh was received looks so weird that it might be considered as a pure joke. Or a provocation. Recent tenders showed extremely low bids without financial incentives,…
Brussels, 15th June 2016: The PV Market Alliance releases today its second annual Global PV Market Report. According to the PV Market Alliance (PVMA), global PV markets should grow by approx. 20% during the next two years, reaching at least 60 GW in 2016 and more than 70 GW in…
Receive our latest news and publications by subscribing to the PV Market Alliance newsletter