China ups 2014 Solar PV Target to 14 GigaWatts

by Giles Parkinson.

Solar PV via Shutterstock
China Solar PV via Shutterstock

Originally published on RenewEconomy.

China’s National Energy Administration (NEA) has reportedly increased the 2014 target for new solar PV capacity installations to 14GW – up from its previous target of 12GW.

The increase was noted by Deutsche Bank analysts, who said the target represents a near 50 per cent increase on the actual capacity installation of 9.5GW of solar PV in 2013.

Chinese officials had previously said that two thirds (8GW) of the 2014 target would come from distributed solar PV (on rooftops or in smaller arrays close to consumption), but it is not clear what the percentage is in the new target.

Earlier this month, Deutsche Bank said surging demand in China, Japan and the US would underpin a “second solar gold rush”. It tipped global installations to rise to 46GW in 2014 (based on the previous 12GW target for China), and to 56GW in 2015.

China is expected to be by far the largest installer of solar PV, followed by Japan, US and Europe, each with around 8GW.

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This article, China Brings 2014 Solar PV Target Up To 14 GW, is syndicated from Clean Technica and is posted here with permission.

About the Author

Giles ParkinsonGiles Parkinson is the founding editor of RenewEconomy.com.au, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia’s energy grid with great interest.

China Moving To Distributed Solar Over Utility-Scale

by Giles Parkinson.

China solar installation
China currently has around 2GW of distributed solar PV, according to Bloomberg data, but wants to increase this ten-fold to 20GW by the end of 2015.

Originally published on RenewEconomy

China is looking to switch the emphasis of its booming domestic solar market towards the “distributed” market – essentially rooftop and small, local, plants – rather than large, utility-scale solar farms.

China, for several years the largest exporter of solar modules, is widely expected to emerge as the world’s largest consumer of solar modules in 2014. The official target stands at 12GW, although some private forecasters such as Deutsche Bank think this could rise as high as 15GW.

Most major solar manufacturers expect China – along with Japan and the US – to account for most of their growth in coming years. But what’s got them a little worried is a draft proposal that will require two thirds of this growth to be from distributed systems.

The solar companies make higher margins, and bigger profits, from large scale installations, but it seems that the Chinese administration is worried about the potential transmissions issues and costs.

According to a Credit Suisse analyst report quoted in Barron’s, the solar market is also concerned that the central government’s focus on distributed generation, at the potential expense of utility scale projects, may make the ~12 GW target unrealistic if utility scale projects are capped at 4 GW.

“The emphasis on the distributed generation segment may make utility scale project approvals from the central government less obtainable,” the report said. And it noted there were concerns about how quickly the rooftop market could grow, given ambiguity about rooftop ownership, and the fact that new feed in tariffs for distribution generation do not commence until the new year.

However, another report from Nomura Securities says it would  make more economics sense for the government to install distributed systems instead of utility scale projects.

“The policy makes economic sense as retail/commercial tariffs are high in the eastern provinces and thus the policy’s focus on distributed installations will generate higher economic returns. In addition, lack of land availability will constrain utility scale projects.”

But that may disappoint some of the major manufacturers, who had big plans for utility-scale projects. These include GoldPoly (which had a pipeline of 1~3GW of large scale projects), Shunfeng (3GW), Hareon Solar (1~3GW), GCL (1GW), Jinko Solar (~300MW), JA Solar (~300MW), Trina Solar (500~800MW), and Yingli Solar (500~800MW). It is thought at 6-7GW of projects are already in development. Some Chinese solar stocks have taken a hit on the stock market in recent days as a result.

China currently has around 2GW of distributed solar PV, according to Bloomberg data, but wants to increase this ten-fold to 20GW by the end of 2015. That would require around 8GW to be installed in 2014, and another 10GW the following year.

Most of the installations are targeted for the major population and industrial centres around Shanghai, Guangzhou and Beijing.

This article, China Looking Towards Distributed Solar Over Utility-Scale, is syndicated from Clean Technica and is posted here with permission.

About the Author

Giles ParkinsonGiles Parkinson is the founding editor of RenewEconomy.com.au, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia’s energy grid with great interest.

Deutsche Says Solar PV Market Could Reach 50 GW In 2014

by Giles Parkinson

Germany solar power
Germany solar power

Originally published on RenewEconomy

The upgrades to the outlook for the solar PV market continue, with analysts at Deutsche Bank now suggesting that some module manufacturers expect the global market to rise as high as 50GW in 2014.

It says solar companies are bullish on the fundamentals of the market and demand from Japan, China and the US. The market could rise to 45-50GW in 2014, which would be nearly 50 per cent more than the anticipated 35GW of installations in the current year.

It says most companies now expect at least 45GW next year – compared to recent industry estimates of around 40GW – and some companies such as Yingli – the world’s biggest manufacturer – suggest it could be as high as 50GW.

China appears to be the big source of demand upside – and could install up to 15GW in 2014. This is after major revisions to the current year’s target to as high as 9GW from prior estimates of 5-6GW, mostly the result of a big boost to the distributed market in that country.

This will be supported by strong demand from Japan, the US and other emerging market.

Deutsche Bank said this was good news for solar stocks, given that increased demand will bring improvements in pricing, margins and therefore revenue and profit improvements. “We expect the current solar rally to continue through the year-end. Trina, Yingli are its top picks in the China solar sector.

Adding to the improved outlook for solar companies was a further shake-out in tier 2 and tier 3 Chinese module manufacturers, most of whom were struggling to access finance and could face problems meeting debt payments.

“Most solar companies plan to add module capacity by spending limited amount on CAPEX or in some cases acquire equipment of bankrupt companies at a discount to market price. In any case, capacity growth from tier 1 companies would be likely constrained by availability of poly, wafers and cells.

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This article, Deutsche Says Solar PV Market Could Reach 50 GW In 2014, is syndicated from Clean Technica and is posted here with permission.

About the Author

Giles Parkinson is the founding editor of RenewEconomy.com.au, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia’s energy grid with great interest.

How The Solar PV Industry Became A Global Phenomenon

by Giles Parkinson –Special to JBS News

This article first published on RenewEconomy

The recent slew of quarterly reports from the world’s major solar PV manufacturers have delivered some encouraging news: surplus capacity is being removed, manufacturing costs continue to fall, selling prices have stabilised and margins are improving. Some solar manufacturers may even post a profit later this year or in 2014.

But by far the most impressive piece of information was the extent to which the industry is growing in new markets. The influence of Europe, which kicked off the solar PV boom nearly a decade ago with its feed-in tariffs, is fading. China, Japan and the US will compete for domination in the coming years, but strong markets in the rest of Asia, Africa and South America are also emerging.

“The global PV market is becoming more diversified,” says Liangshing Miao, the chairman and CEO of Yingli Solar, the world’s biggest manufacturer of solar PV. “China, the US, Japan and other new and emerging markets, will become the main drivers of demand in the second half of this year. (We are witnessing) the globalization of the PV industry.”

This is a recurring theme in the industry. Last month, Deutsche Bank published an analysis which talked of a major “inflection point” in the global PV industry. Analyst Vishal Shah said that three-quarters of the world’s market will be “sustainable” for solar within 18 months, meaning there is an economic case to install solar PV with little or no subsidy.

More recently, Deutsche Bank noted that the US — the world’s biggest electricity market — was rapidly approaching the point where more than half of its states were at “grid parity” also meaning that no additional subsidies are required for solar PV. It predicted the US market would reach annual installations of 16GW by 2016, and have total installed capacity of 50GW.

But it’s not jut the big four markets that are offering huge opportunities for solar PV. In another report, Deutsche said Chile could become the first subsidy-free market in the world, explaining why it had more than 3,500MW of projects in the pipeline.

Robert Petrina, Yingli’s head in the Americas, says sales in Latin America have surged 1,700 percent over the last year, utility-scale projects are popping up everywhere and distributed generation is very strong.

He cited Chile, Mexico, Ecuador and Brazil (Yingli is a sponsor of the FIFA World Cup in 2014) as being among the strongest markets in Latin America. It now operates in 18 countries there.

“The signals overwhelmingly point to continued development in accelerated PV adoption,” Petrina says. “We are seeing new markets open up and project sizes increasing in those regions.”

Yingli published this graph in relation to its 2nd quarter results to illustrate how demand is moving away from Europe. The most interesting parts are the first and third columns, because they highlight how Europe has shrunk from more than 50 percent of demand to just over one quarter.

Yingli’s Miao says the company is already redeploying staff and resources to other emerging markets in Africa and Asia.

In South Africa, the government has already signed contracts for 1GW of solar PV and is currently holding an auction for another 400MW of PV capacity. The provincial government of Gauteng announced earlier this month it would spend $1 billion installing 300MW of solar on the rooftops of all state-owned buildings.

In Zimbabwe, solar developer Twalumba has reportedly signed an MoU with British company Thompson Cole to develop eight solar farms totaling 600MW over the next 15 months, with the help of Chinese and British financing. Saudi Arabia is gearing up to make a massive investment in solar PV, along with other Gulf and north African countries. On a smaller level, Ethiopia is half way through a World Bank-sponsored program to bring distributed solar to 25,000 households not connected to the grid. Private companies offer similar programs in Africa and Asia to some of the 1.6 billion people who don’t have electricity.

In Asia, India is working its way through its ambitious program to have 20GW of solar PV by 2022, Pakistan has just announced plans for 700MW of solar capacity in Punjab province, Bangladesh already has installed a million off-grid solar systems, and has announced plans for another 500MW deployment.

Thailand and Malaysia are emerging as strong markets, and a new source of manufacturing. Even Brunei is looking at introducing a feed-in tariff for solar, albeit to help the oil-rich sultanate reach an incredibly modest renewables target of just 10 percent by 2035. Russia is also holding a tender for 700MW of solar projects.

The predictions of Deutsche Bank, other investment banks, and individual analysts such as Tony Seba, are based on the premise that fossil fuel prices will continue to rise, while solar PV costs will continue to fall. This last assumption is contested by many in the traditional utilities business, but these two graphs below tell us much about the changing dynamics of the industry, and puncture holes in the views of some that the price falls in solar PV modules are unsustainable.

The first graph on the left (from Yingli’s 2nd quarter accounts) shows that in just the past year, the non-silicon cost of PV modules has fallen by 18 per cent. And on the right, we see that because prices have stabilised, or even risen in some markets, the gross margins of the company have rebounded. The fall in costs are consistent with a recent study by the National Renewable Energy Laboratory and the Massachusetts Institute of Technology that suggests production scale, rather than low labour costs, has driven China’s boom in manufacturing PV modules, and delivered its cost superiority of other manufacturers.

Screen-Shot-2013-09-10-at-8.40.26-AM

Intriguingly, Yingli chief strategy officer Yiyu Wang said that project costs for its current pipeline of 130MW in utility-scale solar projects in China are about $1.03-$1.05 a watt. That is less than half the cost of smaller projects in Australia, such as those to be built under the ACT Big Solar program, and one-third of the cost of AGL Energy’s 155MW solar plant proposed for Broken Hill and Nyngan in NSW. Wang suggested that Yingli would generate a return in the “higher mid teens” for these projects.

This article, How The Solar PV Industry Became A Global Phenomenon, is syndicated from Clean Technica and is posted here with permission.

About the Author

is the founding editor of RenewEconomy.com.au, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia’s energy grid with great interest.

Deutsche Bank Predicting Huge Distributed Solar PV Uptake

This post originally published on RenewEconomy by Giles Parkinson

Energy analysts at Deutsche Bank are predicting a huge surge in the uptake of ‘distributed solar’ PV in the United States, the world’s biggest economy and electricity market, saying solar PV installations could rise 7-fold in coming years and lift overall solar PV capacity to nearly 50GW in the US by 2016.

U.S. solar installations through 2016. Image courtesy of Deutsche Bank.
U.S. solar installations through 2016. Image courtesy of Deutsche Bank.

The expected boom in ‘distributed solar’ [which are those installations that are placed on homes and commercial businesses] is based on predictions that 1) solar PV module prices will continue to fall, 2) grid prices will continue rise, and 3) innovative financing options will provide ample and cheap capital.

The US solar market has been dominated by utility scale installations to date — with comparatively little rooftop solar.

But Deutsche Bank estimates that in 2015 and 2016, annual installation rates in the US will jump to 12GW and 16GW, meaning it will likely overtake China, Japan and Germany for the most annual installations.

It says total US solar capacity will grow to 50GW under this scenario (Germany is currently at 35GW but slowing, while China aims for 35GW by 2015) and Deutsche Bank says up to 30GW of US installed solar capacity will come from distributed generation.

We believe 2015 will be a key inflection point for solar power in the United States,” Deutsche Bank analysts say.

The economics are already compelling in 20-30 percent of US states and we expect this to improve as soft costs (balance of systems) come down and potential customer awareness begins to ramp.

The Deutsche Bank scenario suggests the US will become the biggest solar market in the world.

And while 50GW [of solar] will only represent 2% of the country’s total power generation by 2016, its impact on the incumbent electricity market could be considerable, as former Energy Secretary Stephen Chu, NRG CEO David Crane, Duke Energy boss Jim Rogers and Jon Wellinghoff, the chairman of the Federal Energy Regulatory Commission — among many others — have predicted.

deutsche-us-solar-install
U.S. solar installations through 2016. Image courtesy of Deutsche Bank.

We see solar becoming increasingly mainstream as it passes cost competitiveness with traditional forms of generation, the Deutsche Bank analysts write.

While we will likely see some utilities fight it every step of the way (because it threatens their business model), we expect system economics will ultimately win in the longer run and yearly installations will continue the general upward trajectory.

Deutsche Bank estimates that solar PV is [already] at grid parity in the 10 states in the US without additional subsidies. The key to this is the falling price of modules, and the growth of financing options, which benefit from a 30 percent investment tax credit in the US.

It estimates that the long term cost of electricity (LCOE) for rooftop solar is currently at 11-15c/kWh in the 10 states at grid parity, which compares to a retail price of 11c-37c/kWh.

If, as it expects, solar module prices continue to fall to around $2.50 a watt from $3/watt now, then the LCOE in the grid parity states (mostly states with the best solar resource) will fall to 8c-14c/kWh, and another 12 states will come into grid parity. (See graph below).

Screen-Shot-2013-09-04-at-8.42.45-AM
States already at Grid Parity and states poised to hit Grid Parity. Image courtesy of Deutsche Bank.

It notes that economies of scale make modules for commercial and industrial systems even cheaper, with systems estimates at $US2.50/watt for commercial and $2.25/watt for industrial. Both prices are before the benefit of the investment tax credit.

By 2016, the number of US states at grid parity for distributed solar would be 36 if the investment tax credit was reduced to 10 percent — or 47 if the ITC remained at 30 percent. It says that uncertainty over the extension of that credit could cause a boom in solar investment before the deadline expires in 2016.

Deutsche Bank’s focus on the cost of financing is the key, as it plays a critical role in which technologies will be “investable” in future years, as Bloomberg New Energy Finance pointed out in its assessment of the cost of renewables versus fossil fuels earlier this year.

Shift in the Levelized Cost of Electricity. Image courtesy of Deutsche Bank.
Shift in the Levelized Cost of Electricity. Image courtesy of Deutsche Bank.

Deutsche Bank says the growth and popularity of yieldco” type structures — and the fact that they make a lot of money for their investors — means that solar financing costs by will fall by 200-300 basis points, and would boost liquidity.

It says that every 100 basis point reduction in financing costs, results in 1 c/kWh reduction of LCOE (see graph).

We believe solar LCOE could potentially decrease from 10-16 c/kWh to 8-14 c/kWh as a result of wider acceptance of yieldco type structures, the analysts say.

Wider availability of financing options could provide project developers some cushion in a rising interest rate environment.

Another big factor is the increasing price of fossil fuels. Deutsche Bank estimates that 50GW of coal-fired capacity will be removed in the US, in coming years due to pollution and emission laws.

Some new power stations may be built to guarantee supply, but this would force the regulated price of electricity higher, and make solar even more competitive. “We view this as a positive,” it says.

Cost of photovoltaics (PV) in Germany compared to the cost of PV in the U.S.A. Image courtesy of Deutsche Bank.
Cost of photovoltaics (PV) in Germany compared to the cost of PV in the U.S.A. Image courtesy of Deutsche Bank.

Finally, the bank says the price path is already proven by what has happened in Germany, which until a few years ago was the biggest solar PV market in the world, and still holds the most by aggregate with more than 35MW installed.

We have seen dramatic reductions in system costs over the last decade and expect this to continue in the US.

We believe we can see 10-15 percent annual reductions in system cost/watt over the next several years, which should drive pure LCOE down to the 9-14 c/kwh range for potential grid parity states.

Historically, we have seen this play out, although we note that much of the reduction going forward will come from non-panel costs.

It says trends in German installation costs (shown above) show a clear down trend in a more mature industry.

We believe the US can continue its downward trend as systems become larger and soft costs couple with industry efforts towards standardization and efficiency gains to reduce the cost per watt peak before the ITC is reduced.

This article, Deutsche Bank Predicting Huge Distributed Solar PV Uptake, is syndicated from Clean Technica and is posted here with permission.

About the Author

is the founding editor of RenewEconomy.com.au, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia’s energy grid with great interest.