H2 2016 solar slowdown will preface 10% global contraction in 2017, says GTM

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The latest Global Solar Demand Monitor from GTM Research forecasts a drop in solar installations globally in the second half (H2) of 2016 as the markets in China, Japan and the U.K. plummet following a strong first six months.

The report also forecasts a global market slowdown in 2017 of around 10% below 2016’s expected cumulative figure of 73 GW. However, recovery thereafter will be steady and sustained, GTM Research believes, culminating in a global market growing by around 105 GW by 2021.

In assessing current trends in the global solar market, GTM Research identified five drivers that will shape the remainder of the year, prefacing next year’s mild contraction in global installation rates.

The most obvious and widely expected shift for H2 is the deceleration of installation pace in China as the world’s largest and most dynamic solar market engineers an 11% FIT pullback. Over the course of the first half of the year, PV installations in China surged to record levels, with the month of June alone seeing 10 GW of new capacity installed nationwide – near enough 50% of what had been initially expected for the entire year.

However, on June 30 the FIT was reduced significantly; a move that will trigger a stark drop-off in installations, particularly in the three leading solar provinces, GTM Research believes.

Aping this trend are the solar markets of the U.K. and Japan, with the former on the go-slow following a record-breaking Q1 in which 1.5 GW of new PV capacity was added. Following the cessation of the ROC scheme on April 1, there has been a major drop in demand for new large-scale solar capacity, with GTM Research seeing no new utility-scale projects set to come online for the remainder of the year. Regressive FIT policies in the distributed generation markets will also suppress growth.

Japan, meanwhile, will experience a "sharp negative turn" in H2 following the introduction of new government FIT rules that could eliminate up to 30% of the country’s 56 GW pipeline of approved projects. Annually, GTM Research is forecasting a 12% year-over-year market contraction for Japan.

Taking up the baton

The blow of these lost GWs from three of the largest solar markets globally will be softened by triple-digit growth in the solar markets of the U.S. and India, the GTM report confirmed, with the extension of the ITC deadline shoring up the U.S.’s place as a top three market through to 2021.

A notable trend in the U.S. market is this project spillover triggered by the ITC extension, with GTM Research actually revising downwards its 2016 forecast to 14.5 GW as around 60% of utility-scale projects initially slated for this year are held back until 2017. The U.S. has now surpassed one million solar installations and boasts cumulative installed capacity of 27.5 GW.

India’s solar garden appears rosiest, with GTM’s projected 127% growth this year enough to see the country supplant the U.K. as the fourth biggest PV market globally. The Indian solar pipeline stands at 25 GW, of which a further 3.8 GW is expected to be commissioned over the second half of this year.

Extrapolated over the entire year, GTM’s report shows that China is on course to grow by 26.4 GW this year, followed by the U.S. (14.5 GW) with Japan in third place (10.2 GW).

A massive 80% of global solar installations will this year be centered on these five countries (China, U.S., Japan, India and the U.K.), but that dominance will be eroded between now and 2021 as LatAm leads the charge (reaching cumulative installed capacity of 26 GW by that date) followed by Southeast Asia (23 GW) and the MENAT region (19 GW).