Global solar photovoltaic (PV) demand is forecast to hit another annual record of 113-gigawatts in 2018, propelled by strong demand anticipated in China.
According to business information provider IHS Markit, burgeoning demand from the Chinese market is expected to persevere on the back of continuing policy support, a successful transition from a market that had been dominated by large ground-mount projects and strong momentum in the distributed-PV (DPV) sector.
In particular, the fourth quarter of 2018 – with 34 gigawatts of new PV installations – will be the largest quarter in history.
“This latest forecast is close to the global polysilicon limit manufacturers can supply,” says Edurne Zoco, research and analysis director for IHS Markit. “Tight supply and stable prices will continue throughout the year. Our forecast assumes manufacturers can further ramp up production, to meet demand, in the second half of the year.”
According to the latest edition of the new PV Installations Tracker, global solar installations will grow by 19 % in 2018, similar to the 20% year-over-year growth in 2017.
At this rate of installation, module availability will once again be the limiting factor, and prices may limit investment returns on solar projects already under contract to sell electricity at low prices. Stable module prices are expected throughout the year, which is a direct result of continued high demand.
“Demand is not only picking up in China, but also in India, where developers want to secure modules before any additional tariffs are introduced,” Zoco says. “The US continues to import modules, despite the latest import tariffs.
“In emerging markets, countries like Egypt, Brazil and Mexico have large PV projects requiring modules in 2018. Several projects that were postponed in 2017, due to high module prices, will need to be installed this year.”
China will once again dominate global PV demand, reaching 53 gigawatts with an upside potential of 60 gigawatts in 2018, and comprising almost half (47%) of the total market. “Demand in China will once again shape the global PV market,” Zoco says. “This year China will have feed-in tariff deadlines in the second and fourth quarters, which will create two sharp installation peaks.”
Outside of China, India is forecast to overtake the US as the second largest PV market. Even if project profitability remains highly sensitive to module pricing, the fear of possible future import tariffs is likely to drive developers to complete installations in 2018.
Emerging solar markets Mexico and Egypt will make up 1,8% and 1,3% of the solar market, respectively, replacing South Korea and the UK in the ranking of the 10 largest PV markets, in terms of annual PV installations.