In a new detailed report by Deutsche Bank’s US-based solar industry analysts, the PV industry is said to be heading into its “second gold rush” with a base demand of 46GW in 2014, topped by an expected 56GW of demand in 2015.
Deutsche Bank is echoing recent bullish analysis of the PV sector by market research firm, NPD Solarbuzz, which is projecting PV installations to reach 49GW in 2014.
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However, Deutsche Bank noted in the report that there was potential for demand to be higher than forecasted in 2014 due to the key markets of China, Japan and the US exceeding projected installation levels as markets build considerable momentum.
Key markets
Deutsche Bank’s base case demand estimates for China go from around 8GW in 2013 to 12GW in 2014, while the Japanese market is expected to increase from around 7GW in 2013 to around 8GW in 2014.
The US, the third major market, is expected to see demand increase from 6GW in 2013 to around 8GW in 2014.
Despite the European market in decline, Deutsche Bank projects that Europe would account for between 7-8GW of demand in 2014.
Emerging markets are also expected to make a considerable contribution, ranging from 12GW to 17GW of demand, notably from India, South Africa, South America, South East Asia and Australia, which are all expected to surpass 1GW in 2014.
However, despite Deutsche Bank’s bullish analysis it may be underestimating demand dynamics in some key markets such as the UK. According to the bank's analysis, the UK market demand is expected to reach 1.1GW in 2013 and only increase to 1.3GW in 2014.
“The UK installed over 1.4GW during 2013, with deployment in Q4'13 much higher than previously expected,” noted Finlay Colville, vice president of NPD Solarbuzz to PV Tech. “Currently, the economics under 1.4 ROCs/MWh are driving a strong mid-year pull from the ground-mount segment during 2014 – something that was in absence during 2013.
“The UK will comfortably exceed the 2GW level during 2014, with upside potential if changes in legislation to enable the mid-size segment can be accelerated to impact deployment levels over the next 12 months. The residential segment is also set for a very strong Q1'14, with contributions from Northern Ireland also having an impact before changes to residential installations take effect from the start of April.”
Supply/demand dynamics
Deutsche Bank noted that with strong end-market demand and continued capital expenditure constraints as major PV manufacturers focus on building downstream markets and spending primarily targeted at additional PV module capacity the supply of polysilicon, wafers and solar cells could remain in constraint through 2014.
As a result, Deutsche Bank expects major polysilicon players such as GCL-Poly, Wacker, Hemlock Semiconductor and OCI to either reach full capacity or add capacity by 2015. Several major players such as Wacker, Hemlock Semiconductor and OCI have new plants constructed or near completion but on hold that could be the first of a new wave of polysilicon capacity expansions to meet significantly higher demand expected in 2015.
Deutsche Bank also noted that PV was currently competitive without subsidies in at least 19 markets globally and expected more markets to reach grid parity in 2014 as balance-of-system prices continuedto decline, despite cost-per-watt reductions slowing.
Coupled to improving conditions for the downstream market gaining access to low-cost finance and favourable policy conditions in key markets such as China and Japan, the PV market is therefore booming, the report concluded.
