What’s the View on Supply-Demand Trend in the Photovoltaic Industry

According to  authoritative advisory agencys, the installed photovoltaic (PV)  capacity will exceed 57GW in 2015, up by 30% year on year (YOY) from 2014. Judging from the current clean energy policy environment and the downward cost, the worldwide PV market demand is expected to maintain a stable and strong growth rate in 2016, and the YOY increase will exceed 15% and reach about 66GW. PV energy will remain as the top clean energy type of newly-increased installed capacity in the world.

Figure 1 Global PV Market Trend (GW)）

 

Source: EPIA, IHS and Bloomberg

Up to the third quarter of 2015, the total installed capacity had reached 38GW. China will become the largest PV market in the world. But as a new-type clean electric power, the market is still at its incipient stage, and the installed capacity only accounts for 2.7% of the total in China, while the electric energy production accounts for a mere of 0.7% of China's total, pointing to a huge market potential. A host of favorable policies for the new energy sector in China serve as strong supports for the future PV market. According to the Strategic Action Plan for Energy Development (2014-2020), PV installed capacity will amount to 100GW by 2020.

Reducing new energy subsidy is a long-term trend. As PV power generation technology advances and equipment investment cost drops, the cost per kilowatt hour of PV electricity is already lower than the selling price, and the degree of dependence on national subsidy has been on the decrease on a yearly basis. The reduction in subsidized electricity price in 2016 has been able to be digested by the improved technology, cost, interest rate and other conditions. and China is also trying to speed up industrial advancement via invitation for bids and other marketized means. Market-based competition will foster many clean energy enterprises with technology and scale advantages.

Table 1 Subsidy Cut of PV Electricity Price (yuan/kilowatt hour)

 

	Present electricity price	Electricity price after cut
Type I Region	0.90	0.80
Type II Region	0.95	0.88
Type III Region	1.00	0.98