EUPD Pegs 2023 EU Solar PV Installations At 60 GW

• EUPD Research has shown that solar module oversupply in the EU is a real concern and estimates Chinese module export to the EU at around 87 GW by 2023-end 
• At the same time, it expects actual installations this year to settle at around 60 GW, and in 2024 between 65 GW and 75 GW 
• The researchers emphasize that punitive tariffs are no answer to the situation as these would delay the achievement of EU's climate plans 
• A concerted effort is required from all stakeholders, including strong policy support to boost domestic capacity 

While numbers differ on the huge volumes of Chinese solar modules resting in European Union (EU) warehouses and some analysts believe the pile to swell to around 100 GW by 2023-end, EUPD Research in a brief report has shown that actual installations this year are likely to settle between 57 GW and 60 GW. 

Referring to the Secretary-General of the Photovoltaic Branch of the China Chamber of Commerce for Import and Export, Zhang Sen, EUPD believes the concern about oversupply of solar modules to the EU is real. A lot of it is due to low prices as Chinese manufacturers have lowered their monocrystalline PERC module prices by 30% from Q1/2022. The latest TaiyangNews PV Price index shows a decrease of up to 46.4% year to date (see TaiyangNews PV Price Index – CW47). 

In comparison, prices of the same technology modules offered by German manufacturers declined only 15% since Q1/2022, and are significantly higher than China-made products. 

Referring to data analysis firm Ember's estimates of 78 GW of Chinese modules exported to the EU during 8M/2023, coinciding with those calculated by Rystad Energy that estimates the bloc imported 85.9 GW Chinese modules by September 2023-end, EUPD says it would assess the situation with caution. Rystad had earlier said solar module capacity in European warehouses is likely to grow to 100 GW DC by 2023-end (see More Chinese Modules For Europe). 

EUPD does, however, believe the assessment of PV Magazine Founder Karl-Heinz Remmers that a 60 GW EU market in 2023 would mean a normal inventory of 10 GW, 50 GW of module consumption in 2023, up to October-end, and 59 GW excess inventory till 2023-end, including the excess from 2022. 

According to EUPD, General Administration of Customs in China does not release the solar export capacity in MW or GW. Hence, market intelligence firms arrive at the estimated numbers based on their own methods; for instance, Ember divides the export value in US dollars and the average monthly PV module prices. 

Basing its research methodology on several data points, including module export weights, EUPD pegs Chinese exports to the EU at 66.6 GW till August 2023, which it says 'obviously reduces the concern for oversupply.' 

Considering the bloc installed 40.4 GW solar in 2022 and factoring in Q4/2023 data, it expects Chinese solar module exports to the bloc in 2023 to add up to around 87 GW. 

It explains, "In previous years, the primary challenge for installers was extended delivery times, prompting many to diversify their product portfolios and accumulate larger quantities in stock. However, these forward-thinking installers are now confronting the brunt of the challenge. Availability is no longer a major concern, and the market oversupply has driven prices down significantly compared to the previous year, when some installers made significant stock purchases." 

In 2024, EUPD expects the EU to install 65 GW to 75 GW of new PV capacity. 

The reason behind this oversupply situation is not just price decline, according to the EUPD; it is also due to:  

• Solar PV learning curve due to the process of continually reducing the cost as more experience and expertise are gained in its deployment and development 
• Reshuffling of the industry towards newer cell technology of n-type with a majority of leading players moving towards it. While this means smaller players with old machinery are forced to exit the space sometime in the near future, newer, more efficient modules mean faster installation, with less required workforce and subsequently higher margins. "Put this in the context of acute shortage of skilled workers in Europe and it would not be difficult to understand why this tectonic reshuffling with focus on new technologies is transpiring," notes EUPD 
• While European PV companies deal with supply and installation issues, Chinese companies compete to get a bigger share of the market as they expand their manufacturing capacities at a faster rate 
• In the midst of these challenges, the EU has been working on support measures for local manufacturing in the form of the Solar Energy Strategy within the REPowerEU, the Green Deal Industrial Plan, the Net-Zero Industry Act (NZIA) and Critical Raw Materials Act. It is being done with the intent to lessen the reliance on a single source of supply as solar continues to gain shares in the EU power generation portfolio 

Nonetheless, the German market research firm believes this is no reason to impose punitive tariffs for China-made modules as these would severely impact the EU climate goals, job market and slow down the PV industry with rising costs, echoing the sentiments expressed by BNE's Carsten Pfeiffer (see EU PV Protectionism Harms Climate Protection And The Economy). 

Instead, it recommends, "Therefore, the re-shoring of the European manufacturing must happen with great caution and the right tools so that the painful, fruitless experience of the 2010s is not repeated."  

Going forward, EUPD believes the market will naturally self-regulate in tandem with the stabilization of regulatory mechanisms, rendering it less susceptible to fluctuations. Component manufacturers too will strategically prioritize shipments to countries with reasonable profit margins, it says. 

Especially for the European Union, the analysts argue, "It is imperative to recognize that Europe constitutes a mosaic of distinct states, each delineated by unique political, economic, and environmentally sustainable strategies and prerequisites. The linchpin for survival and subsequent prosperity in the European PV market lies in the nuanced understanding of 'what,' 'how much,' and 'when.' This is achievable exclusively through rigorous market research and data analysis." 

The complete EUPD analysis is available on its website.