Earlier this week market research firm IHS issued revised figures for global PV installs in 2014 and confirmed its 2015 guidance at 57GW. Ahead of a webinar to be jointly hosted with PV Tech on Wednesday 15 April, IHS’ senior analyst, Susanne von Aichberger, and senior director, Ash Sharma, answer some key questions on what 2015 will bring.
Q1. How would you summarise the outlook for the PV industry this year?
In 2015, the global PV market is projected to show the strongest growth rate since 2011, with demand increasing by 30% and installations hitting 57GW – that’s 10 times larger than the market seven years ago!
Despite this, conditions remain challenging for the industry with probably more risks than opportunities. Paradoxically we see end demand both consolidating in Asia (specifically China and Japan) but also diversifying into new emerging markets. Solar companies will continue to need to adjust business models, supply chains and channel partner strategies in order to remain successful in 2015 as the industry continues to evolve.
From 2016, global demand will likely decelerate, with most major markets either having passed their peak or having settled to modest growth rates.
Q2. What will be the largest markets in 2015?
The largest markets will be China, Japan, the US, the UK and India. Together they will account for approximately three quarters of global demand. Solar projects over 5 MW in size will be the largest part of the market globally, with more than 27GW being installed in 2015. In 2014, China and Japan made up more than 50% of global demand.
Q3. How much will the industry grow by in 2015 and where will this growth come from?
China will be the largest growth driver and is expected to contribute more than 4GW of the 13GW increase in installations we forecast to happen in 2015 over 2014.
The fastest growing region will be the Americas, projected to grow by 50%, followed by Asia with a growth rate of 27%.
For the first time since 2011, Europe’s demand will increase. The 20% growth in installations is mainly due to the UK, which became Europe’s largest market last year, and has been continuously growing since 2008. Already implemented severe incentive cuts, and expected further funding restrictions, however, are likely to strongly reduce demand in the UK after 2015. And given that the deadline for funding of >5 MW projects under the UK’s renewable obligation certificate (ROC) scheme (which was by far the largest portion of the market) at the end of March, more than half of the UK’s 2015 installations are likely to have already occurred by the time you are reading this.
Q4. Which will be the most promising new markets?
While the Middle East/Africa (MEA) region is forecast to grow by 23% in 2015, the market in Latin America is likely to nearly triple this year. At 860MW, Chile is projected to be the region’s strongest market driver in 2015. Longer term, however, this market looks less promising as we’ll discuss on our upcoming webinar.
Q5. What will happen to PV module and balance of system pricing in 2015?
Module prices, both crystalline silicon and thin film, are projected to fall moderately in 2015 and continue to decrease over the next years. Costs of all upstream segments are expected to decline faster than prices over the next five years, leading to rising upstream margins to 2019.
Our latest forecasts are showing that balance of system (BoS) pricing will decrease by 7% in 2015 with inverter prices decreasing the most of all BoS equipment and dropping by 9% to US$0.14 per watt in 2015.
Q6. What will the supply-demand balance look like this year?
The supply-demand balance will continue to improve in 2015, after a shakeout of uncompetitive capacities in the upstream sector in the previous years and a projected demand growth of 30%. Utilisation levels are forecast to return to healthier and higher levels and as a result pricing will firm up. New capacity is expected to come online in 2015 and quarterly variations in demand may cause temporary supply gluts.
Q7. How will the European solar market transition away from subsidies to a sustainable model (feed-in tariff to market-driven)?
In an increasing number of PV markets, the contribution of PV to electricity production is approaching levels that exclude further unlimited and uncontrolled market growth. Some of the world’s most mature markets are in Europe, and they are now stepping up to the challenge of integrating PV production into the electricity market.
In 2014, Germany has set the framework for the country’s integration of renewables into the energy industry. The well-proven FIT scheme will be gradually replaced by the direct marketing model, where PV system operators have to sell their electricity on the free market and only receive a market premium on top of each kWh produced.
In other European countries, market integration of PV is even further advanced. Last year, Italy proved that a significant subsidy-free market can develop if the conditions are favourable. After the country’s PV funding scheme Conto Energia had phased out in the previous year, the unsubsidised PV market reached about 0.5GW in 2014. This is a steep decline from the incentive driven market in the previous year, but demand is projected to show a stable upwards trend over the next years. The market will be mainly based on net-metering or PPAs, supported by relatively high electricity prices and excellent insolation levels.
The joint IHS PV Tech webinar will be held on Wednesday 15 April at 3pm. It will present IHS’ predictions for the PV market in 2015 across the entire value chain, from polysilicon manufacturing to policy development. It will present global demand forecasts identifying long-term growth opportunities, and PV supply analysis. To sign up, click here.
The global solar market will see 57GW of new capacity installed this year, according to IHS. Image: SolarWorld.