2018 brought the PV industry many ups and downs, including influences from Section 201 and 301 of the US Trade Act, the “531 New Policy” from China, safeguard tariff in India, and the termination of MIP undertaking in the EU. The industry’s extreme uncertainty had impacted every section of the PV supply chain. However, EnergyTrend, a division of TrendForce, points out that the overall market situation will improve in 2019 and demand will reach a new high throughout the year.
According to Rhea Tsao, an analyst at EnergyTrend, China’s “531 New Policy” has certainly impacted the PV industry in 2018; however, the impact was partially offset by the growing demand in the overseas market, and was not as severe as originally anticipated. By the end of the year, the industry’s demand did not fall as sharply as expected. In 2018, the newly added PV capacity is estimated to have experienced a hike of 4.9% YoY, reaching 103GW.
In 2019, with the momentum from the industry’s encouraging policies and more competitive product prices, the new grid-connected capacity is expected to reach a new high at 111.3GW, with an increase of 7.7% YoY, in 2019. In particular, EU market has seen recovery since 2018 with the implementation of Accord de Paris and decreased module prices. For 2019, the demand in the EU will see the most growth, which will possibly surpass 50%.
Global market to become more distributed; India is the most likely to foresee a larger growth in demand
From 2018, the size would remain steady at 100 to 120GW with an annual fluctuation rate of less than 10%. According to EnergyTrend’s latest Market Demand Report, the number of GW-level markets will increase from 6 in 2016 to 15 in 2019, showing that the global market will continue to become more distributed.
In 2019, China and the United States will be the top two markets in the world, while India will be the country with the third highest PV demand and Japan the fourth. After 2019, India is the most likely to foresee a larger growth in demand thanks to its favorable environment and encouraging policies made by the local government.
Other emerging markets such as Southeast Asia, North Africa, the Middle East, and Latin America started weighing in in 2018. The demand in the Middle East in 2018 is expected to grow by around 100% YoY and it will go further up in 2019 with another growth of around 50% YoY.
Upstream sectors of supply chain to become more concentrated; Mono-Si wafers to be the mainstream supply
Although the whole PV supply chain suffered from low margin and oversupply in 2018, the Tier one companies still reported strong operating results driven by their advanced technologies, competitive cost structure, and wide global distributions. Most of their capacity expansion plans can still be put into practice. Because of that, the upstream sectors have continuously become more concentrated.
According to EnergyTrend Database, the top 5 Chinese polysilicon suppliers are anticipated to release new capacity in 2Q19 and they will by then contribute up to 70% of the overall worldwide supply. Their cash costs will become more competitive as well. As for wafer suppliers, LONGi and Zhonghuan Semiconductor, who mainly provide mono-Si wafers, will dominate the wafer market. With mono-Si wafers becoming mainstream and taking up to 60% of the annual wafer supply in 2019, their supply chain will play a more dominant role in the market. It will also reverse the situation that multi-Si products are more competitive than mono-Si ones in recent years, and multi-Si manufacturers with less market competitiveness will gradually be eliminated in the future.
EnergyTrend believes that the PV industry has faced several critical challenges as well as reshufflings in 2018. In the face of these developments, the industry is expected to become healthier and more stable in the long run. As the supply chain’s prices continue to decline, the PV industry is expected to approach grid parity with fewer subsidies. The popularity of non-subsidized systems and the actual uniform power cost (LCOE) will become the price indicators for supply chains in the future.