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Global PV Demand to Reach 59GW and Industry to Undertake Massive Capacity Expansion in 2016
December 11, 2015 | TrendForceEstimated reading time: 3 minutes
Governments in major PV markets are cutting subsidies as installation costs have fallen, with PV power plants in some areas having almost the same LCOE (levelized cost of energy) as natural gas combined cycle plants and coal-fired power plants in the U.S. and Europe. Furthermore, system vendors are bargaining down module prices in order to reach their targeted rates of return for PV power plants. The emerging markets have become important export channels for module manufacturers and will help drive product sales. Nonetheless, module prices have been generally low and are forecast to slide slightly in next year’s off-peak season.
Industry-wide capacity expansion will take place as impacts of trade cases diminish
Though subsidy reductions in major markets will put pressure on module prices next year, demand will be more predictable as uncertainties caused by trade disputes start to recede. Capacity expansion will also take place across the industry. EnergyTrend analyst Corrine Lin stated that first- and second-tier manufacturers in China and Taiwan all have plans to increase cell and module production, either by expanding capacity at home or abroad. Chinese companies especially have been very proactive. This wave of capacity expansion will prevent the possibility of cell and module shortages in 2016, but it will also cause severe market oversupply for both products in 2017.
New technologies will reduce costs; mono-Si market share will increase
Material and production costs of cells have been falling for many years and there is now very little room for further reduction. Cell manufacturers instead now looking to reduce the overall costs of their products by raising efficiency (thus reducing the cost per watt). Mono-Si PERC cells, for example, have higher production costs but can also bring in much higher margins. Hence, this cell technology has become widely adopted. Based on EnergyTrend’s projection, demand for mono-Si cells will grow from 9.5GW this year to 14.5GW next year.
New grounds have also been broken in the manufacturing of modules. Glass-to-glass (G2G) module continues to grab’s market attention as this design technology can do away with aluminum frames and backsheets, thus improving the overall cost structure. In sum, there room for further price reduction in the next year’s module market is relatively large.
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