According to IHS Markit, a market research company, due to the Chinese government's sudden new policy stipulating the development upper limit, China's installed capacity is expected to decline. Nevertheless, it is expected that the installed capacity of solar PV will reach 105 GW in 2018, compared with the previous year. The same period increased by 11%. The installed capacity last year exceeded 96GW.
Utilities and distributed generation are the two largest market sectors in China. Due to the government setting the upper limits of these two areas, the project installed capacity is expected to decline. IHS Markit said that due to the direct impact of falling expectations, 2018 global Photovoltaic installed capacity is expected to drop from 113GW to 105GW.
IHS Markit expects that China's installed capacity will drop from 53GW in 2017 to 38GW in 2018. After the policy change, other Chinese market research companies will adjust the guidance value to 30-35GW.
According to IHS Markit, it is expected that the major impact on China's projects will appear in the second half of 2018, and the installed capacity in the second half will be less than half of the first half.
Supply chain impact
IHS Markit expects that the entire PV supply chain will be affected by China's shrinking projects, which will lead to 'the fierce competition in the international market and a sharp drop in the price.'
However, IHS Markit does not expect the average selling price of components to fall as Bloomberg New Energy Finance predicts. IHS stated that: In the early stages, the concept of 'average' price does not make sense. The final price level depends not only on China’s recent decisions. And it is also influenced by the decision of the lowest European import price and India's guarantee tax and anti-dumping investigation.'
IHS Markit concluded that, in 2018, the development of the market will be defined by the over-capacity and fierce competition between suppliers.
The solar industry has gone through another wave of oversupply, low profit margins, and industry consolidation. Once these low-cost issues are resolved, solar energy will be more competitive in new markets.
