Despite overcapacity back in 2012 when manufacturing capacity was 60GW/y, China continued to expand capacity to beyond 80GW/y driven by local government competition. The current price war was a consequence of demand reduction in China driven by reduced central government subsidies. While China may increase demand from current depressed levels in 2017 it is unlikely to grow significantly beyond 2016 levels. The US market is set to decline in 2017 after a stellar 2016. Global PV demand is predicted to decline in both dollar and GW terms in 2017 and the overcapacity will kill profitability and investment in more efficient plant and equipment.
Where this will all end is anyone’s guess. Trump’s anti China stance could well throw a spanner in the works. China has become almost the sole source of PV panels. The market has very unstable characteristics that could easily lead to sudden and dramatic change.
By Edmund Kelly