SOLAR INDUSTRY OUTLOOK
Cautious optimism despite Covid-19 pandemic
The Covid-19 pandemic initially clouded the bright outlook for the solar industry in 2020. Nonetheless, Bernreuter Research has remained cautiously optimistic. Its original assumtion that there will be new photovoltaic installations of at least 115 gigawatts has been exceeded by far.
The impact of the Covid-19 pandemic on solar demand
Before the economic impact of the Covid-19 pandemic became visible in March, Bernreuter Research assumed new global photovoltaic (PV) installations of 145 gigawatts (GW) in 2020. That value was at the upper end of what other analysts and the in-house market research teams of polysilicon manufacturer Wacker and inverter producer SMA predicted (if a forecast range has been published, the chart below shows the respective central scenario or mean value).
Forecasts of global PV installations in 2020 before and after the Covid-19 impact
Of course, the initial lockdowns in many countries to prevent the rapid spread of the virus and the resulting economic losses have dimmed the global market outlook for solar power. Accordingly, analysts have revised their demand forecasts for 2020 significantly downwards – mostly by 25 to 30 GW. Two directions can be identified: The more conservative group now expects new PV installations of 100 to 112 GW in 2020; the optimists predict between 115 and 123 GW.
Due to the nature of the pandemic, high uncertainty underlies these figures. The forecast of Bloomberg New Energy Finance (BNEF) is a good example for that: Its central scenario of 111 GW assumes that several Covid-19 infection waves will occur in 2020. If the pandemic remains limited to only one wave, BNEF still expects new PV installations of 141 GW in 2020.
Why at least 115 GW are possible in 2020
Provided new lockdowns will not be necessary in 2020, Bernreuter Research is cautiously optimistic. We do not share the view of several market observers that solar demand will decrease for the first time in history. Instead, we think that at least 115 GW of new PV installations are possible.
That would be on the level of 2019 as reported by the Photovoltaic Power Systems Programme of the International Energy Agency. BNEF and IHS have invoked higher figures of 121 GW and 124 GW, respectively, for 2019, but these data are at least partly due to a different methodology that counts solar panels delivered to the construction site instead of finished installations.
Our cautious optimism is based on two general observations. Firstly, engineering, procurement and construction (EPC) companies that build large, utility-scale solar power plants have quickly adapted to the impacts of the Covid-19 pandemic. Residential, commercial and industrial PV installations will take a bigger hit, but have a smaller market share of around 30%.
Growth trend of global PV installations from 2000 through 2019
Secondly, the solar industry weathered the global financial crisis in 2009 fairly well. While the gross domestic product fell by 1.7% worldwide in that year, the solar market still grew by a sturdy 25%. For sure, history does not repeat itself, and the PV branch was in its early growth phase at the time. But in our view, the development in 2009 is indication enough that the solar industry could weather the Covid-19 storm acceptably as well.
Update: The development in 2020 has even outstripped our assessment. The installation results in China (48.2 GW) and Vietnam (9.2 GW of rooftop PV) were higher than expected, due to exorbitant rallies in December (China: 23.3 GW; Vietnam: 6.7 GW of rooftop PV). Therefore, Bernreuter Research has updated its assumption of new PV installations for 2020 from 127 GW made in its Polysilicon Market Outlook 2024 to 139 GW.
Published on June 29, 2020; last update on February 13, 2021 © Bernreuter Research
About the author
Johannes Bernreuter is head of the polysilicon market research specialist Bernreuter Research. Before founding the company in 2008, Bernreuter became one of the most reputable photovoltaic journalists in Germany because of his diligent research, clear style and unbiased approach. He has earned several awards, among others the prestigious RWTH Prize for Scientific Journalism from the RWTH Aachen University, one of the eleven elite universities in Germany.
Originally an associate editor at the monthly photovoltaic magazine Photon, Bernreuter authored his first analysis of the upcoming polysilicon bottleneck and alternative production processes as early as 2001 (Publication List). After preparing two global polysilicon market surveys for Sun & Wind Energy magazine in 2005 and 2006, he founded Bernreuter Research to publish in-depth polysilicon industry reports.
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