Global solar installations will increase 15% and reach 66.7 GW this year, with China, the U.S., Japan and India making up the top four solar markets, according to the latest forecast from Mercom Capital Group. The clean energy communications and consulting firm says that is impressive growth for an industry that has absorbed a lot of blows, most recently with SunEdison’s fall.
“Solar installations are forecasted to grow year-over-year globally despite recent headwinds in the sector with solar stocks, yieldcos, bankruptcies and the negative perception surrounding solar public companies,” comments Raj Prabhu, CEO and co-founder of Mercom Capital Group. “Solar has grown from just 2.6 GW in 2007 to a forecasted 66.7 GW in 2016, showing impressive resiliency along the way as it becomes one of the fastest-growing new generation sources around the world.”
The report says China installed 15.1 GW of solar in 2015, retaining its top spot as the largest solar installer in the world, and the company forecasts the country to install 18.5 GW this year. The additional 5.3 GW installation quota, combined with the expected rush to meet feed-in tariff (FIT) deadlines in the first half of the year, should help China exceed 2015 installation numbers.
China’s first-quarter 2016 installation figures of 7.14 GW confirm that it is off to a fast start, continues the report. China recently reduced its FIT by up to 11% based on regions. The report says that in order to address the subsidy payment issues and raise additional revenue, the renewable energy surcharge has been increased by 27%, and an on-grid power tariff for commercial and industrial customers has been reduced to tackle shortages in the renewable energy fund. To address curtailment issues, the Chinese government has proposed a policy of guaranteed purchase of renewable power, which it plans to implement gradually.
Elsewhere in the world, the report says, the unexpected extension of the federal investment tax credit (ITC) in December last year has completely changed the dynamics of the U.S. solar market. Mercom forecasts a conservative 13.5 GW of solar installations in 2016, as vendors are indicating a slower first quarter – at least in terms of new projects – because developers are taking their time to line up suppliers and negotiate contracts. The report notes this may, of course, change in the second half of the year.
Japan is expected to install around 10.5 GW of solar this year. Its current solar installation goal is 28 GW by 2020. The report says Japan cut its FIT by 11% in March. While the country started off with an overly generous FIT in 2012 of ~$0.387/kWh, it is now down to ~$0.221/kWh. The report adds that Japan continues to struggle with grid connection, curtailment issues and an undeveloped pipeline. Of the approved pipeline, only about 15% has been installed. Japan is also looking to implement solar auctions in order to cut subsidy costs.
India is expected to install over 4 GW in 2016, bringing it to the fourth spot globally. The report says India currently has a pipeline of over 21 GW under development and in pending auctions as the country targets its installation goal of 100 GW by 2022. Aggressive bidding in its recent auctions has caused some concerns to the viability of these projects due to unrealistic low bids, the report adds.
According to Mercom, the top three solar markets in Europe are again expected to be the U.K., Germany and France.
The report notes that proliferation of solar auctions around the world is an important development over the last 12 months, with subsidy costs from solar becoming an issue in many countries. Germany completed three auctions in 2015, the U.K. and Japan are looking at a similar model, France is conducting solar auctions, and China is also contemplating auctions. India and South African solar policies are primarily based on auctions, while Brazil and Mexico are also largely auction-based.
Mercom’s full report is available here.