The global installed capacity of solar PV is expected to increase from 49.77 gigawatts per anum to 69.86 gigawatts by 2020, but declines in module prices will see the market value drop from $39.71 billion in 2016 to $33.43 billion in 2020.
These are the mixed findings from the latest report from research and consulting firm GlobalData, which released its new report this week analyzing the global solar market through 2020. With capacity increasing slowly over the next four years, the real story is the decline in solar PV module prices during the forecast period which will lead to an overall decrease in market value.
GlobalData points to “competitive market conditions” and the existing price sensitivity as key to the topsy-turvy conclusions from their new report.
“With the year-on-year reduction in global module prices, the projects have less capital investment and have driven the solar power system installations on the whole,” explained Praveen Kumar Ama, GlobalData’s Analyst covering Power.
“The crystalline silicon (c-Si) and thin-film modules have seen large price drops since 2010. The average price of a module was approximately $2.17 per watt and $1.99 per watt in 2010 for c-Si and thin-film modules, respectively. Module prices fell sharply in 2011 due to a production rush, leading to oversupply.
“Falling prices stabilized starting 2014 and reached $0.61 per watt and $0.60 per watt in 2015 for c-Si and thin-film module, respectively. This price is expected to fall further during the forecast period, reaching $0.48 per watt and $0.46 per watt for c-Si and thin-film module, respectively, by 2020.”
On top of the falling module prices, GlobalData points to the uncertainty in future energy policy as being a further driver of market decline over the next four years.
“Despite climate concerns, some countries have either rolled back incentive schemes or reduced the level of incentive, which has raised uncertainty over the profitability of solar projects,” Ama continued. “This may hamper the growth of solar installations worldwide. For instance, Feed-in Tariff (FiT) levels have been reduced in the UK and Japan. Japan has also proposed changes in its FiT structure, which will have a negative impact on the growth of the solar PV sector.”