2018 brought the PV industry a lot of 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. Thankfully, in 2019, a positive turnaround is expected. According to EnergyTrend, 2019 can be summed up in 5 major trends that signal a potential recovery for the industry as it becomes more mature.
Trend No.1 : Demand Will Reach a New High in 2019
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 (the actual shipments are estimated to have reached around 95GW).
In 2019, with the momentum from the industry’s encouraging policies and more competitive product prices, the worldwide demand in the PV market is likely to continue to increase. In particular, the demand in the EU will see the most growth, which will possibly surpass 50%. The new grid-connected capacity is expected to reach a new high at 111.3GW, with an increase of 7.7% YoY, in 2019.
Trend No.2 : The Number of GW-level Markets Will Rise to 15 in 2019
From 2018, the global PV market 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 market will increase from 6 in 2016 to 15 in 2019. With the rise of the number of GW-scale markets, the global market will continue to become more distributed.
GW-Level Markets (2016-2020)
At present, China and the US are still the top 2 markets, while India has become the third biggest one since 2017, followed by Japan. 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. The worldwide market size will begin to stabilize from 2019. Among all markets, India is the most likely to foresee a larger growth in demand.
Global PV Demand (2016-2023)
Trend No.3 : The Upstream Industry Will Become More Concentrated, and Mono-Si Will Take the Lead
Although the whole PV supply chain suffered from low margin and oversupply in 2018, the Tier 1 companies still reported strong operating results driven by their advanced technology, competitive cost structure, and wide coverage. Most of their capacity expansion plans can still be put into practice. Because of that, the upstream sectors has continuously become more concentrated.
According to EnergyTrend’s Supply 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 will dominate the wafer market. Mono-Si wafer, the two leaders’ main product, is likely to take up to 60% of the annual wafer supply in 2019. With mono-Si wafers becoming mainstream, their supply chain will play a more dominant role in the market. The war between mono-Si and multi-Si supply chains starting from the second half of 2017 is expected to finally come to an end.
Trend No. 4: Capacity of Bifacial Product Surges, while Efficiency of P-PERC Cell Continues to Improve
Bifacial PV cell processing technology is currently quite mature. It can now create more power without incurring extra costs; in other words, it can bring more revenue. Thus, the overall capacity of bifacial PV cell has kept increasing and is estimated to reach around 40GW in 2019, with a large part of the growth coming from bifacial mono-Si PERC cells.
In terms of performance, the conversion efficiency of mono-Si PERC cells still has some room for improvement. EnergyTrend anticipates that the average efficiency of mono-Si PERC cells will rise to 22% in 1H19 and to 23% by the end of 2019 as the adoption of more technologies. As the growth of mono-Si PERC will limit the overall development of the next generation N-type product, its capacity will only increase slightly in 2019.
Growth of Bifacial PV Cell Capacity (Unit: GW)
Trend No. 5: LCOE Becomes Benchmark for Price Drop in Module Sector
With the PV supply chain’s prices constantly dropping, the PV industry is expected to grow further and will be approaching grid parity with less and less subsidies. The penetration rate of subsidy-free projects and the actual LCOE will become crucial references for suppliers’ pricing strategies.
In retrospect, 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. Its prices will depend hugely on the overall LCOE. In the future, the phase-in of energy storage systems and smart grid technologies will be the key to accelerating the marketization of solar power.
