China largest Solar Hub

China remains the world’s largest source of solar panel demand, despite missing its 2015 target of 17.8 GW by almost 15%. The Middle Kingdom has also become the country with the largest installed capacity of solar energy, overtaking Germany last year with 43 GW of total solar installations. Germany in comparison has less than 40 GW of solar demand. China will continue to be the No.1 incremental source of demand, with 15 GW again projected to be installed in 2016 as the country looks to reduce its dependence on coal for power generation. The country has transformed itself in a short span of 3 years to become the key demand driver for solar energy, after being a solar manufacturer in the years before 2012.

NEA has also said that 15% of China’s total capacity of solar energy comes from rooftop distributed generation. This is quite small when you compare to USA, which gets almost 50% of its new capacity from rooftop solar plants and 70% for Europe. Note, land constrained countries such as Europe are better off with rooftop solar capacity. In my view India with its land problems should also look to favor rooftop solar over ground mounted solar, however issues in regulation and utilities are major hindrances.

USA might compete with China in the No.1 spot this year, as it is projected to install 15 GW of solar this year due to the cancelled ITC no extension policy. USA was originally supposed not to extend its ITC policy that led to a massive start in solar installations, which are going to get completed in 2016. Now with ITC extended upto 2020, there is no huge pressure to install but a number of projects that were started in anticipation will get completed leading to a solar install spike in USA in 2016. This should get partly corrected in 2017, when the demand pull in for 2016 will lead to lower installs. 1