H2 2016 solar slowdown will preface 10% global contraction in 2017, says GTM Research

Analysts expect installations in China, U.K. and Japan to slow over the second half of the year, but U.S. project spillover and India’s large pipeline will hold course despite global slowdown forecast for 2017.

August 3, 2016 Ian Clover

The latest Global Solar Demand Monitor from GTM Research forecasts a drop in solar installations globally in the second half (H2) of 2016 as the markets in China, Japan and the U.K. plummet following a strong first six months.

The report also forecasts a global market slowdown in 2017 of around 10% below 2016’s expected cumulative figure of 73 GW. However, recovery thereafter will be steady and sustained, GTM Research believes, culminating in a global market growing by around 105 GW by 2021.

In assessing current trends in the global solar market, GTM Research identified five drivers that will shape the remainder of the year, prefacing next year’s mild contraction in global installation rates.

The most obvious and widely expected shift for H2 is the deceleration of installation pace in China as the world’s largest and most dynamic solar market engineers an 11% FIT pullback. Over the course of the first half of the year, PV installations in China surged to record levels, with the month of June alone seeing 10 GW of new capacity installed nationwide – near enough 50% of what had been initially expected for the entire year.

However, on June 30 the FIT was reduced significantly; a move that will trigger a stark drop-off in installations, particularly in the three leading solar provinces, GTM Research believes.

Aping this trend are the solar markets of the U.K. and Japan, with the former on the go-slow following a record-breaking Q1 in which 1.5 GW of new PV capacity was added. Following the cessation of the ROC scheme on April 1, there has been a major drop in demand for new large-scale solar capacity, with GTM Research seeing no new utility-scale projects set to come online for the remainder of the year. Regressive FIT policies in the distributed generation markets will also suppress growth.

Japan, meanwhile, will experience a “sharp negative turn” in H2 following the introduction of new government FIT rules that could eliminate up to 30% of the country’s 56 GW pipeline of approved projects. Annually, GTM Research is forecasting a 12% year-over-year market contraction for Japan.

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