Where will Solar Industry Go From Here…
Solar energy has been witnessing an overwhelming response from all around the world. The technology has not only been successful on grounds of its green credentials, but also a sharp decline in its prices. The solar panel prices have plunged almost 40% in the past few quarters. Much of it could be attributed to a slower demand from China. The country has also been facing grid issues leading to chaos in the transmission of this generated solar power. The Chinese government is now lowering subsidies.
The first half of the year witnessed China installing a gargantuan 20 GW of solar power. This rush was solely due to the fact that only solar projects that were operational by June 30, 2016, would be eligible for a ‘feed-in tariff’ by the Chinese government. While the installations beyond June 30th would get a lower tariff rate (lower than 15 US cents/ kwh). The Chinese NEA has also reduced its solar installation target to 110 GW from 150 GW as planned earlier. This has affected the demand and supply economics of the global solar industry.
First Solar (NASDAQ:FSLR) recently announced phasing out an entire series of its S5 modules to conserve costs and also to launch a much more competitive S6 series which would be better designed to handle peer competition. While its Chinese counterparts like Trina Solar, Canadian Solar and Jinko Solar have been increasing capacity and feeding the over supply, I think First Solar made a strategic and important decision, which should help the company stride through this downturn.
In India, a solar panel now costs close to 36-37 cents per unit from 43-44 cents per unit a quarter earlier. While a dip in panel rates could help developers and solar power utilities bid at lower rates, many large companies like First Solar have ruled out signing contracts in India on grounds of economic viability of such projects. The solar power tariff have now reached a historic low of INR 4 per unit. India has also reduced the reference rate for grid solar power to just USD 6 cents/kWh.
China has a goal to increase renewable energy’s share to 15% of the overall energy mix. India too has an ambitious target to install 100 GW of solar power by 2022. India’s solar energy capacity has grown by more than 130% since the last one year. Now the Donald Trump led USA is also an additional point to factor in the global clean energy scenario. Trump has called climate change a hoax and favors the thermal industry to the clean stocks. The solar industry is set for another major consolidation under these conditions and it remains to be seen who would survive this slowdown.
This is interesting… do you know of any companies in India who can help you get houses on solar power? I mean, the houses are not connected to the electric grid and are not dependent on them. Esp those rural areas where electricity is yet to make an appearance.