The solar market could contract for the first time ever

The positioning and support system of a solar panel device stands at the Monte das Flores center operated by EDP-Energias de Portugal SA’s renewables unit, EDP Renovaveis SA in Vora, Portugal. (Bloomberg pic)

NEW YORK: The global solar market could do something this year that it’s never done before: shrink.

Solar installations in 2018 may total 95 gigawatts, down 3% from a year earlier, based on the most conservative of three scenarios modelled by Bloomberg NEF in a report Monday. For comparison’s sake, the typical nuclear reactor has about a gigawatt of capacity.

The potential decline is a testament to just how much sway China’s solar demand still has in the global market. The country decided in June to put the brakes on new installations this year. That could lead to a worldwide glut of panels and plunging prices. Cheaper prices, in turn though, could trigger more demand, and BNEF is projecting that the market will be rebound next year.

“Despite the policy headwinds from China, it looks like the global solar market is eventually set for another year of growth, even though a very slight one,” BNEF analyst Pietro Radoia said. “Our new forecast tells us that China’s relevance on the global scene will decrease and that by 2020 it will account for only a quarter of the total global demand, down from over a half in 2017.”

While the most conservative of BNEF’s models pointed to a potential decline in installations this year, a base-case forecast shows installations could essentially remain flat. And the most optimistic prediction shows an increase to 104.3 gigawatts.

One bright spot for solar is Japan, where the government continues to grant feed-in tariffs to projects under 2 megawatts. But it could take time for developers to secure sites and approvals to connect to the grid. So the uptick in capacity may not be evident until the end of 2020, BNEF said.