1. The sharp decline in component prices stimulated the outbreak of overseas markets
After the new policy of 531 in 2018, the price of monocrystalline PERC modules dropped from 2.66 yuan/watt to 2.25 yuan/watt at the end of 2018, a decrease of 15%. The sharp decline in module prices has stimulated the explosion of overseas demand in 2019. Overseas installed capacity of 63.5GW from January to September is expected to approach 90GW throughout the year, an increase of 31GW or 53% over 2018. The outbreak of overseas markets will drive positive growth in global installed capacity in 2019. It is estimated that the global photovoltaic installed capacity will grow by 10% + in 2019, reaching 113-120GW.
2. Cost reduction and efficiency continue to advance, there is still room for component prices to fall
In 2020, the profitability of silicon wafers, the introduction of large silicon wafers, and the improvement of efficiency will drive down component costs, and there is still room for about 10% in component prices to fall. In Q3 2019, the battery price plummeted, driving component prices to the current 1.77 yuan/watt, a 21% decline for the year, which is expected to stimulate overseas demand next year. If the component price can drop by another 10% next year, the overseas market will grow further.
3. High visibility of incremental overseas demand
US ITC postponed for 5 years, and the installed capacity next year is expected to be 15-20GW. The United States is the second-largest photovoltaic market after China. In 2018, the United States installed about 10GW of photovoltaic power, and this year is expected to grow by 30% to 13GW, and the US photovoltaic market is back to growth. In November 2019, the U.S. Congress agreed to extend the ITC for another five years, with plans to end by 2024. The ITC policy is very attractive for companies with a large number of reported profits, and investment in photovoltaic projects can effectively avoid taxation. According to the statistics of the American Photovoltaic Association, the currently contracted photovoltaic projects are close to 38GW, the planned projects are 56.6G, a total of 95GW, and the annual average of up to 20GW in the next 5 years.
German installed capacity has steadily increased and has been a steadfast promoter of the new energy industry. In September 2018, the MIP price limit and dual anti-expiry expired, and the installed capacity in Germany restarted with high growth. In 2018, the installed capacity recovered to 2.9GW, a 72% growth rate. In 2019, the installed capacity is expected to be 3.6GW, a growth rate of 25%. It is expected to reach 4- in 2020. 5GW.
In February 2019, Spain's "National Energy and Climate Comprehensive Plan" was released, suggesting that renewable energy accounts for 42% of final energy consumption in 2030, installed capacity reaches 120GW, and power generation accounts for 74%. After the release of the policy, Spain ’s photovoltaic installations broke out, with 4.5GW expected to be installed this year, which is 10 times that of 2018. Spain has grown into a 4-5GW photovoltaic market.
In June of this year, the Italian government issued a new energy stimulus bill and announced a tender plan for photovoltaic power plants. 500MW of power station bidding in 2019; 1900MW of power station bidding in 2020; 2300MW of power station bidding in 2021. The lighting conditions in Italy are better, and the distribution is also developing rapidly. With the superposition of large-scale power plant indicators, the market size of 2-3GW is expected in the next two or three years.
India has excellent lighting conditions and is the third-largest market after China and the United States. The Indian government is committed to the localization of photovoltaic manufacturing, and setting tariffs has hindered the achievement of photovoltaic installation goals. After the tariff rate was reduced by 5% in August this year, the export of Chinese components to India increased by two months in a pulse. The tax rate will also be reduced by 5% in February next year. No accidental SGI tariff will be canceled in August. At present, some Indian political parties are drafting new tariffs, but the implementation will not be until at least 2021, so starting in August next year, Indian component imports are likely to surge. The Indian market is expected to reach the level of 10-15GW next year.
Japan's land resources are tight, and photovoltaic installations are mainly distributed. Japanese energy also relies heavily on imports, and high electricity prices stimulate distributed development, which accounts for more than 70% of new installations. Among all types of photovoltaic installations, distributed has the highest sensitivity to module prices. The continued decline in module prices is expected to stimulate the continued growth of Japanese installations. It is expected that Japan's photovoltaic installations will be 7-8GW in 2020.
Middle East countries have started large-scale photovoltaic power plant index auctions one after another, and currently, we can see the 17GW installed plan. From 2018 to 2019, Saudi Arabia, the UAE, Oman, and other countries have successively launched tender auctions for large-scale photovoltaic projects. The Middle East should be the region with the fastest growth rate in the next three years.
Overseas photovoltaic installations are expected to be 85-95GW this year, a substantial increase of about 50% year-on-year. This year's growth is not the result of a certain country's outbreak, but the overall prosperity of the photovoltaic market, with more than 1GW of markets exceeding 20. With the further decline in module prices, photovoltaics are becoming more competitive in a wider area. Next year, the United States, India, the Middle East, Italy, and other regions will become major overseas growth points, with an increase of about 20GW. Next year, the size of the overseas market is expected to reach 100-110GW, an increase of 15-20% from this year.
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