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October 3, 2013Solar Demand 2015
Deutsche Bank has recently come out with very aggressive demand projections for 2014, saying that the demand will shoot up to 45 GW from 35 GW in 2013 as China demand increases to a gargantuan 15 GW from the 10 GW target. This will double China’s demand from 6-7 GW in 2013 and lead to shortages in the supply of polysilicon. Note the solar industry has been going through a loss making last 2 years, as solar panel prices have crashed due to a massive capacity over-expansion in China. This led to a 60 GW supply of solar panel capacity with somewhat slower increase in supply of polysilicon, wafers and cells. The price fall has led to an increase in the demand for solar panels. This has also been driven by favorable solar policies in Japan and China even as demand has saturated on the erstwhile European demand driver.
I think that the projection is a bit overambitious as China faces transmission capacity constraints in linking the massive utility solar farms to major consumption centers. The wind industry in China which installs 15-20 GW of wind energy every year has been facing this problem for quite a while now. Ramping from an already large size will be difficult for China given that it will take a big improvement in the quality and size of the power grid. I think that other countries should see increasing demand as solar panels become increasingly mainstream due to the lower prices of solar systems. Ikea the iconic furniture retailer has started stocking solar systems at its shops in the UK as solar system prices have become very affordable.
The next big opportunity for growth in the global solar business lies in small, emerging markets where photovoltaic (PV) installations are forecast to rise at about triple the global average during the period from 2012-2017.Annual installations in these emerging countries are expected to increase to 10.9 GW in 2017, expanding at a CAGR of 38% from 2.2 GW in 2012. In contrast, the overall global market will expand at a CAGR of only 13% during the same period. The emerging markets will account for 19% of global installations in 2017, up from just 7% in 2012.