|Workers install solar panels in South Africa. |
Source: Associated Press
Steep price declines in the solar industry in 2018 sparked demand outside of China and created a new batch of up-and-coming markets that will help boost global installations by as much as 35% this year, according to comments by Daqo New Energy Corp. CEO Longgen Zhang on a March 13 earnings call.
Zhang said he expects global solar installations to increase to between 120,000 MW and 140,000 MW in 2019 as China recovers from a policy-driven slump and demand surges in markets such as India, South Africa, South America and Europe. According to a December 2018 estimate by IHS Markit, global solar installations totaled approximately 104,000 MW last year. The firm said it expects installations to total 123,000 MW in 2019.
Demand is coming from "almost everywhere," Zhang said. "Looking forward, we believe the solar ... industry has become much stronger and independent of policies and is expected to grow sustainably over the long term with ... better stability."
China-based Daqo New Energy, which produces the raw material polysilicon for solar panel manufacturers, reported fourth-quarter 2018 net income attributable to shareholders of $11.4 million, or 86 cents per basic American Depositary Share, compared to net income a year earlier of $33.7 million, or $3.16 per ADS. Revenues fell by 36% year over year to $75.6 million.
Solar panel prices crashed in 2018 after the Chinese government enacted new policies aimed at cutting demand in the world's biggest solar market. Beijing made the move after its deficit of unpaid tariff subsidies ballooned to 113 billion Chinese yuan at the end of 2017, IHS Markit said in a recent white paper, citing figures from China's National Energy Administration.
Early in 2019, China released new draft solar policies for this year that are expected to provide approximately 3 billion yuan in subsidies to support up to about 35,000 MW of new installations, with an overall target for project development of up to about 45,000 MW, Zhang said.
Solar companies around the world had been awaiting Beijing's policy announcement. Even with its market slowdown, China accounted for an estimated 65% of solar panel production in 2018 and 41% of installations globally, according to IHS Markit.
Paula Mints, chief analyst at SPV Market Research, said the "turnaround" in China's solar policy was likely an attempt to bolster industry employment in the face of a broader economic slowdown. The policy reversal, along with rising demand in some markets in Europe and the Middle East, could support "accelerated growth" in 2019 and potentially into 2020, Mints wrote in a Feb. 28 report.
In the U.S., analysts at Wood Mackenzie Power & Renewables and the Solar Energy Industries Association, a trade group, on March 13 projected a 14% increase in solar installations in 2019. Philip Shen, a managing director and senior research analyst at ROTH Capital Partners LLC, recently said he has heard 2019 growth estimates for the U.S. as high as 30%.
"A return to much stronger global growth in 2019 will occur, thanks to increases in a wide range of markets," IHS Markit said in its February report.
Mints, however, pushed back on the idea that the solar industry's prospects have been decoupled from government policies, as Zhang suggested.
"Even [solar] demand advertised as un-subsidized relies on heavily subsidized manufacturing to hold down component prices," Mints wrote. "Reliance on incentives and mandates, and on very inexpensive, low-margin components, as well as few markets to absorb excess capacity has left the solar industry vulnerable to shocks" and "far from mature."