Mercom reiterates global solar PV market forecast of 38 GW in 2013

12 September 2013

Following the negotiated settlement of the EU trade case against Chinese solar photovoltaic (PV) imports, Mercom Capital (Austin, Texas, U.S.) has maintained its global solar market forecast of roughly 38 GW in 2013.

Forecasts for individual nations also remain largely unchanged in the updated version of Mercom's analysis. The company predicts that China will be the largest market in 2013 at 8.5 GW, followed by Japan at 7 GW and the United States at 4.5 GW.

“After years of overcapacity, bankruptcies and record low prices we are now seeing price stabilization, higher capacity utilization rates and a move towards supply-demand equilibrium,” notes Mercom Capital Co-Founder and CEO Raj Prabhu.

“Market conditions for solar look much better than they did just three months ago and we are reiterating our global installation forecast of ~38 GW for 2013. One of the big overhangs, the China-EU trade case, has been settled, which could have otherwise set off an all-out trade war. This brings some sorely needed certainty to the market.”

German, Italian markets decline

Germany's fall from the position of the world's largest solar market is already visible in the first seven months of 2013. The nation installed only 2.1 GW of PV by the end of July 2013, compared to 4.4 GW installed in the first seven months of 2012.

Mercom notes that the German federal government's plans to reduce installations to the 3.5-4 GW range through a feed-in tariff degression appears to be working, and predicts that Germany will install 4.0 GW in 2013.

Italy, which has been the second-largest market in recent years, has also fallen from its position of leadership following the closure of the nation's feed-in tariff in July 2013. Nonetheless, Mercom predicts that Italy will install 2 GW by the end of 2013.

China moves stress domestic demand

Other changes since Mercom issued its last forecast in June 2013 include the Chinese State Council raising its target for solar installations to 35 GW by 2015. The company states that China's emphasis on supporting domestic demand is driven by different factors than other nations.

“China’s push towards stronger domestic demand is primarily driven by necessity - to help domestic manufacturing and address air pollution problems,” notes Prabhu.

“It would have been inconceivable just a few years ago to think that China would look to solar as a solution to its unprecedented environmental problems. That is precisely what is happening now.”

Clouds on the horizon for Japanese market

While it predicts that Japan will be the world's second-largest PV market in 2013, Mercom also warns of potential long-term problems in the market arising from infrastructure issues.

“Japan’s grid is monopolized by 10 operators who behave as 10 separate local grids with almost no interconnection,” states Prabhu. “These grids were built to transmit power from large mega power plants and not for smaller renewable energy projects.”

Mercom warns that some PV projects are already being rejected, with utilities citing overcapacity and grid stability issues, and notes that Japan's Ministry of Economy, Trade and Industry is looking into the reasons for project delays, which could include shortages of materials.