Chinese polysilicon giant Daqo New Energy may be rolling the dice by going hell for leather to expand its production capacity only months after fears were voiced of a global supply glut – but its strategy has been endorsed by investment house Credit Suisse.
When the Chinese government abruptly applied the brakes to solar incentives in May, industry analysts forecast a slump in global demand for polysilicon and the panels it is the chief ingredient for.
Only yesterday Daqo announced it is pressing ahead with plans to more than double output to 70,000 MT by March 2020. And Credit Suisse, in its Alt Energy in 2019 report for investors, says that is a smart move because of the hugely more ambitious solar targets the Chinese government is expected to announce early in the (Western) new year. A word of warning though, the industry experts the Zurich based finance titan is basing that prediction on… are no other than pv magazine.
Last month, our own Sandra Enkhardt broke the news that PV Info Link expects the Beijing authorities to raise the 2020 solar capacity target to somewhere between 210 and 270 GW. And the positive noises coming out of the Chinese pavilion at the recent COP24 climate change talks in Katowice have done little to quell the growing optimism about a solar resurgence in China.
Solar surge in America
Credit Suisse predicts new solar capacity will top out at 80 GW this year but then rebound to 94 GW next year, thanks to a 2 GW leap in installations in China on this year's figures, a similar rise in India and a whopping 6 GW advance in the U.S. – despite President's Trump's protestations about coal.
Further out, the report's authors foresee 152 GW of solar capacity being added in 2022 thanks to favorable policy, corporate demand and popular support – two elements reflected by the opening by Nissan yesterday of a solar rooftop on a facility in Amsterdam that was part supported by crowdfunding. With installations rising to around 240 GW by 2030, Credit Suisse is seeing strong markets in the Middle East, Europe, Latin America and the U.S.
The central message of the Credit Suisse report is that developers have a healthy immediate outlook – with positive noises around Azure Power despite speculation around the non viability of the record low energy tariffs it agreed in India – but that investors should be more wary of big manufacturers.
Daqo has the edge
Bearing in mind the caveat about potential conflicts of interest because of the bank's investments, Credit Suisse was warm on Daqo, whose aggressive price pressure could see it eventually operate on margins of around 30%, and ‘neutral' about First Solar and JinkoSolar.
And the analysts were also positive about the prospects of an upshift in the energy transition, pointing out: “Residential solar will be attractive for homeowners as it is cheaper than retail electricity cost in 40-plus states [of the U.S.].” The report added: “Utility scale solar plus storage is already cheaper than gas peaker plants. Residential solar plus storage is economical in five states, growing to 23 by 2025.”
Maybe the noises coming out of Katowice weren't all hot air after all.
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