GTM Downgrades China's 2018 Solar Capacity Forecast by 40%

This year, China’s new policy on solar energy capacity restrictions has led GTM Research to reduce its 2018 installed capacity by about 20 GW.

GTM Research is reducing its new solar capacity forecast for China from 48 GW to 28.8 GW. In 2017, China added about 53 GW of solar energy, which accounted for more than half of the total global increase.

GTM Research said that the reduction in demand in China will lead to a new wave of global oversupply. According to Jade Jones, a senior solar energy analyst, this situation may lead to a 32% drop in PV prices to 36%. He pointed out that suppliers may be forced to slow investment in photovoltaic manufacturing capacity.

On June 1, China stopped the approval of new subsidized utility-scale PV projects in 2018, and set an annual cap of 10 GW of distributed generation capacity, while cutting subsidies for on-grid tariffs and announcing new utility-scale PV projects Must compete in the auction.

According to the energy consulting firm Wood McKenzie, China’s move aims to control the cost of subsidies because the cost of subsidies may reach 250 billion yuan by 2020. In 2017, the subsidy cost reached 100 billion yuan.

Benjamin Attia, a solar energy analyst at GTM Research, expects that the upcoming solar auction will hit a record low price, and solar electricity prices will fall below $20/MWh in the next 12 months.