Impacted by China’s New PV Policy, the Global PV Market Will See Lower Demand and Possible Oversupply, Says TrendForce

A notification released on May 31st 2018 by China’s National Development and Reform Commission (NDRC), Ministry of Finance, and National Energy Administration (NEA) provides new regulation for PV industry in China, which may influence various types of PV projects. EnergyTrend, a division of TrendForce, estimates that the new regulation will likely slash the domestic PV demand in China to 29~35GW. Consequently, the demand in global PV industry will see negative growth for the first time, decreasing to less than 100GW. The new policy imposes considerable pressure to the supply chain, and the prices have begun to drop.

The notification has lowered the national PV feed-in tariff (FiT) for the quota of 2018. Particularly, there is no change to the FiT for PV Poverty Alleviation Power Plant. The notification also provides guidelines for various types of PV projects. The quota for 2018’s DG systems will be about 10G, while the quota for ground-mounted power plants will be suspended in 2018. Consequently, China's PV demand is estimated to drop significantly by 40% to 31.6 GW compared with 2017.

China will remain the world's largest solar market, however, due to the tightening policies in China, the global PV demand is expected to set back in 2018. EnergyTrend estimates that the global PV demand will decline by 5~8% to 92~95GW in 2018 compared with 2017, and will not return to above 100GW until 2019 when more new markets emerge. In addition, as suppliers have already planned capacity expansion, the oversupply in PV industry will be more severe due to the shrinking Chinese market. As the result, the supply chain will see continuous price decline this year.

EnergyTrend further notes that, the oversupply caused by the new policy will not only lower the prices, but also make module suppliers seek overseas markets. This will in turn reduce the average prices of PV modules in the global market, weakening US’s protection of domestic suppliers by Section 201. The tariff listed in Section 201 will be reduced to 25% in 2019. At that time, the imported modules will have lower prices than those traded in the U.S. market even with the 25% tariff, which will make the imported modules more competitive in the U.S. market.

For China’s new notification of PV industry released on May 31st 2018, EnergyTrend provides a more detailed analysis, forecast of market situation and price trend. Please click here to download the full report.