According to most analysts 2016 will shake out to be a very
good year for solar in terms of deployment and expansion. Installed
capacity worldwide will most likely top 70 GW.
In 2016 PV module prices dropped again mostly due a glut of
Chinese made modules that entered the market unexpectedly. According to a
recent U.S. DOE SunShot report, analysts have reported modules quotes between
$.40 and $.50 per watt and some in the industry have seen quotes below $.40 for
2017 delivery. 2016 also saw record low tenders for projects in India, Dubai
and Chile.
“Solar has moved to a point where its competitive with
traditional other power options,” said Brian Carey, US Cleantech Advisory
Leader at PwC in an interview.
David Feldman, Senior Financial Analyst with the National
Renewable Energy Laboratory (NREL), said that he wouldn’t be surprised if 2017
was a good year, given the fact that panel prices are dropping so rapidly and
people are pushing for aggressive costs.
“I could see that translating into very low system prices,”
he said adding “if you think about the fact that solar is locking in electricity
for the next 20-30 years it looks very competitive to other sources of
generation in the long term.”
Countries
Analysts interviewed by Renewable Energy World favored India
as the top market for growth in 2017. The U.S. came in second followed by
Africa, the Middle East and China and Mexico, which are all viewed a growth
markets for 2017. Japan, Germany, Australia, and the UK will likely stay flat
or contract in 2017 according to the analysts.
“The U.S. has moved into one of
the top positions in terms of leaders in the industry but there are a lot of
other countries that are ahead of the U.S. both in terms of total cumulative
installed capacity and also annual installations,” said Feldman.
Growth in India and China is being fueled by the
government’s desire to expand solar capacity in the country. In fact, according
to SPV Chief Market Research Analyst Paula Mints all solar growth is “either
government funded, subsidized, incentivized or mandated.” (See sidebar,
Debt-fueled Growth)
“India is government mandated growth and developers are
shoving everything they can into the ground,” said Paula Mints, Chief Market
Research Analyst with SPV Market Research.
Project Sizes
Looking at the solar market a different way, analysts expect
to see utility-scale projects dominate the PV market with the commercial and
industrial (C&I) sector coming in at a close second. Uncertainty around
net-metering means that sector will grow the least amount, according to
analysts. Although residential will still be a growth sector overall.
“The residential market is the US, EU, Japan,
Australia and that’s it,” said Mints, adding “In the U.S. I think that
net-metering changes have cast a pall on the residential market so it has
slowed significantly.”
NREL’s Feldman agrees. “I think the biggest threat to
further solar deployment is at the distributed level and has to do with state
laws dealing with net metering,” he said in an interview.
Technology
Most analysts aren’t expecting a new or groundbreaking solar
technology to hit the market in 2017. Instead module makers are upping their
timelines for improved module efficiency to offer advanced technology that can
deliver in this low-pricing environment.
“Because of the rapid reduction in pricing, companies have
started to significantly push their roadmaps forward, said Feldman. Indeed,
First Solar announced in November that it was scrapping production of its
Series 5 modules and will spend 2017 focusing on manufacturing the Series 6 –
its most efficient module yet.
In addition, in 2017, utilities and companies will continue
to explore how they can improve the economics of solar through grid
enhancements.
“I don't think it’s going to be next year but in the next 10
years there is going to be an emphasis on demand response/battery management,”
said Feldman. He expects to see more integrated technologies that are going to
work alongside PV and believes there will be more implementation of these types
of solutions globally in 2017.
“It’s not going to take over but it will be a nice new thing
that PV can provide,” he said, adding that certain markets with
high-penetration of solar such as Europe, Japan, California and Hawaii will
more proactively explore these new services that PV could provide.
Policy
While in the U.S. the Trump administration will mostly
likely undo the country’s commitment
to the Paris Agreement, all signs indicate that most other countries will
stand firm in their commitment to it, and that could be a good thing for solar,
said Feldman.
“Solar is one of the best options for that for carbon
reduction in certain places,” he said.
Even in the U.S. analysts are not overly concerned that a
new president could stop the growth of solar at least not for 2017. The Clean
Power Plan is one regulation that is on the chopping block but that wasn’t
supposed to go into effect until 2020.
“I think the train has already left the station,” said PwC’s
Carey, adding “the market is moving forward.”
Could the new administration remove tax favorable clean
energy tax credits? Yes, but since they were enacted by congress, it would take
another act of congress to undo them, something Feldman doesn’t see likely to
happen. In fact, there is some thought that the threat of possible near-term
changes to tax credits or depreciation could add some urgency to solar
development in the U.S. — that very same urgency that was lessened a bit when
the tax credit extension was passed late in 2015.
“One could imagine that it might shorten people’s
timelines,” said Feldman.
Corporate Commitments
Carey pointed out two important recent trends that could
lead to significant clean energy growth in 2017. The first is that the number
of infrastructure firms investing in renewables has increased. PwC noted
that more than more than half of the large infrastructure funds allocated money
to renewable energy in Q1 of 2016. He said 69 percent of the funds invested in
energy overall and 52 percent invested in renewables. According to Carey
there is more than $100B in money that has been raised but not allocated yet
and that is an “all-time high.”
“We can expect to see a lot of that going into renewables,”
he said.
The second major trend is corporate commitment to renewable
energy. In late 2016, Google announced that it would be powered 100 percent by
renewables in 2017. According to the RE100, 82 other companies have made that
same commitment so far. These are global companies from Europe, the U.S.,
India, China, and the UK.
Debt-Fueled Growth
According to Paula
Mints, Chief Market Research Analyst with SPV Market Research, if you sit
down and think about the way solar is operating, the unprofitability up and
down the supply chain, it will make your head explode.
“Nobody is making money,” she said.
Mints is concerned that the solar industry is unsustainable
because the whole industry is supported by government incentives or mandates
and that is partly to blame for companies underbidding on projects.
“The only way it’s being able to operate this way is because
of government funding, which by the way, is the same for conventional energy,”
she pointed out in an interview.
Her big concern is what happens when governments decide to
step away.
“At some point the Chinese government might just say ‘forget
it, that’s it,’” she said, which is what happened when the FIT dropped in China
over the summer and module prices began their downward spiral.
“It’s a shame that our expectation about any good is that it
is going to get ever cheaper. While it’s true that most goods do become more
affordable with time, they have to be affordable with a margin for an industry
to be sustainable or you see companies just getting out of the business because
it doesn’t pay.”
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