Solar module prices are set for dramatic falls in the third quarter of 2016 as projected installations in China slow, causing a glut of panels on global markets.
Analysis from the IHS consultancy suggests Chinese developers added 13 gigawatts of solar in the first six months of the year, and are fast approaching the country’s 20GW annual cap.
“The rush in installations in the first half of this year, driven by the (Chinese) feed in tariff (FIT) cut on June 30, 2016, will result in a major slump in demand in the third quarter, with installations falling 80 percent,” said IHS Technology analysts Ash Sharma and Edurne Zoco.
That’s bad news for manufacturers but good for global efforts to ramp up solar power, said Gerard Wynn from GWG Energy.
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A separate research note from UBS underlines the view that China is well on course to meet its annual 20GW solar target through to 2020.
“While the market is concerned about a sequential decline in new solar installation in H2 as the installation boom fades, we think it is very likely that the full-year installation target of 20GW will be achieved,” it said.
“Given the solar installation target for the 13th FiveYear Plan period, we do not think it will be difficult to install 20GW of solar in each of the next 5 years.”
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Global costs of solar energy have plummeted, disrupting the business plans of market incumbents and offering plans of avoiding dangerous global warming a lifeline.
India energy chief Piyush Goyal told investors in April solar was now cheaper than coal in many parts of the country, citing power prices as low as 4.34 rupees a kilowatt-hour.
In Chile, the fast-growing solar sector has expanded so fast it’s giving power away for free, Bloomberg reported this week.
And in the Middle East a slew of new solar projects have been announced in Dubai, Kuwait and Saudi Arabia as governments seek to transition away from oil.