Global market intelligence firm IHS Markit has revised its total solar PV installed capacity forecast for the year 2021 to 181 GW, increasing it from 158 GW it offered in December 2020. This 181 GW would mean a 27% annual growth over 2020 according to its analysts.
Markets
Major driver for these installations will continue to be China that the analysts expect to exceed 60 GW annual capacity in 2021, followed by 27 GW likely for the US market. India may see its 2021 installations growing to a robust 12 GW thanks to strong backlog of projects and the rush to complete projects before Basic Customs Duty (BCD) kicks into effect from April 2022 (see India Imposes Basic Customs Duty On Cells & Modules).
Europe is likely to bring online several scheduled tendered projects, but cost increase may hamper some of these.
"Leading module manufacturers are sold out for the first half of the year," said Research Manager, Clean Energy Technology at IHS Markit, Josefin Berg. "There is no indication of price weakness for July shipments yet, manufacturing capacity remains sufficient and no major material bottlenecks have arisen to change our forecast for 181 GW in global solar PV installations."
Challenges
And this growth will come, according to IHS Markit, despite rising module prices, long lead times and rising freight costs, while the supply chain in the industry moves with increased emphasis on profitability, technology leadership and consolidation.
It sees global module demand to grow through H2/2021 irrespective of price rise for critical raw materials as polysilicon, copper and steel that's pushing up module prices (see Tight Raw Material Supply Pushing Up PV Module Prices).
Analysts see certain costs as for glass coming down from Q2/2021. Yet module prices will not really come down as much due to strong demand in both China and the international markets from May 2021, and 'increased focus on manufacturers' profits'.
However, Clean Energy Technology Executive Director at IHS Markit Edurne Zoco pointed out, "Even if demand for PV modules grows from Q2 2021, increased lead times resulting from shipping disruptions from China to overseas markets may still constrain the seasonal fourth-quarter installation rush this year and result in some installations rolling over to 2022," says Edurne Zoco.
Focus on profitability will assume greater importance for the solar manufacturers as several leading names are publicly listed and there is increased pressure from investors to increase profitability.
"Profitability in the solar supply chain is becoming critical since the leading module companies are publicly listed and require cash to accelerate investments in product R&D and equipment CAPEX to prepare for the commercial scale of next solar generation technologies from 2023," explained Zoco. "Investments will also be needed to adapt module supply chain to lower-carbon and ESG standards demanded by the market."
In February 2021, Bloomberg New Energy Finance guided for 2021 PV installations to grow to 160 GW under conservative scenario, going over to a maximum of 209 GW (see BloombergNEF Forecasts 160 GW New Solar PV Build In 2021).