Under the influence of China's new photovoltaic policy, will 2018 be a repeat of 2011?

In its newly released analysis, Taiwan TrendForce expects negative growth this year, down 5-8% from the 98 to 99 GW installed in 2017, with additions falling to 92 to 95 GW. IHS Markit revised its forecast to 105 GW from 113 gw, while SolarPower Europe revised its forecast to 102GW from 107GW, while TrendForce's forecast was more pessimistic.

TrendForce forecasts that new installations in China will fall 40% to 31.6GW in 2018. A parallel mini-upsurge is expected before the June 30 deadline for grid connected stations to qualify for FIT 2017. But analysts said, "only ongoing projects will be connected in a timely manner."

Demand in the third quarter is expected to be "significantly reduced" on the back of new regulations, with a slight rebound in the fourth quarter due to Top Runner programs and poverty alleviation programs that have not been affected by the changes.

According to Top Runner, the quota allocated between 2017 and 2020 is 32 gigawatts. TrendForce said the plan may not be implemented to the end, but will be implemented as much as possible because the government is "taking the plan very seriously".

Next year -- 2019 -- global installations are expected to exceed 100 GIGawatts again, as falling component prices attract new market participation, as well as an increase in photovoltaic projects in China that do not require subsidies. Indeed, Taiwan analysts believe policymakers are encouraging provincial and municipal governments to support the sector in line with their policies. "The new policy will address the problem of inadequate subsidies and make companies more competitive in the market," TrendForce said. He added: "Grid parity may be realized sooner than expected due to the low FiT rates, low component prices of the Frontrunner plan. In addition to the green energy certificate quota system and market-based electricity trading pilot, more subsidy-free projects are expected to emerge in 2019. "

April data from the National Energy Administration (NEA) showed: large increase in DG in the first quarter of 2018:9.65GW of PV capacity was installed, including 7.68GW of distributed generation system. For distributed Generation (DG) projects, TrendForce expects the 10 GW quota to be used up soon, so the June 30 deadline will not generate much demand.

In addition to creating oversupply and lowering the price of photovoltaic modules, China's new policy will also push domestic suppliers into other overseas markets. This would have the knock-on effect of a reduction in the global average selling price (ASP), thereby weakening the tariff under section 201 trade cases.

"Listed tariffs will be reduced to 25% in 2019. At that time, even with a 25 percent import tariff, imported components were cheaper than in the U.S. market, which would make imported modules more competitive." "Said the analyst.

2011 was a devastating year for the global solar pv industry (China announced its first subsidies for kilowatt hours and the US started a trade war). Will 2018 be the year history repeats itself?

In 2011, FIT uncertainty spread across Europe, particularly in Italy, the Czech Republic, Germany, France and Slovakia, and in addition to the impact of the Spanish market collapse, spurred a free fall in component prices -- about 22% in Europe and Japan, and 30% in China.

However, this did not trigger the higher demand expected due to (I) increased project financing; And (ii) buyers waiting for further price declines.

Bloomberg New Energy Finance said last week it expects polysilicon solar panel prices in China to fall 34%. Since China is the largest solar market, the impact is bound to spread to other markets.

Polysilicon prices are expected to be most affected, falling from around 125 yuan ($19.5) per kilogram in April to around 105 yuan in June. It is expected to drop further to 95 yuan by the end of this year and around 87 yuan by June next year.

For polysilicon chips, prices will drop from less than 3.80 yuan in April to less than 2.30 yuan (about $0.36) in June next year, and for components between 270-275W, prices will drop from 2.50 yuan to about 1.60 yuan (about $0.25).

When 2017 was a glorious year, you couldn't have imagined that this year would be like this. The sudden change has not laid the foundation for a sustainable development strategy and a predictable development path. Hopefully pv practitioners can learn some lessons from 2011.