Global Solar Demand Monitor: Q2 2016

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The global solar market had a record year in 2015, adding 14GW to its annual rate of installations for a total of market size of 55 GW.

The Global Solar Demand Monitor, launched by GTM Research,  is a quarterly report that brings insights and forecasts on the global solar landscape. By analyzing the demand drivers, policies and risks that shape markets, it enables companies globally to be successful in the market today while preparing for the future.

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2016 is set to be another good year, with the market set to grow by 21% to 66 GW. The landscape is very diverse, with the top three markets making up the majority of demand, over ten major gigawatt-scale markets globally, 20 will be multi-gigawatt by the end of the decade, and Latin America and the Middle East on the rise. At the same time, global solar policies are in a state of flux, transitioning away from direct subsidies to competitively procured solar, leading to more complex market dynamics and business models.

There is now, more than ever, the need to dive deeper into the top markets to sustain growth as they mature while expanding an understanding of major markets and those on the rise.

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The drop in growth expected in 2016 compared to last year marks a slight slowdown that will deepen in 2017.  The slowdown is tied to the policy turmoil in several large markets – China, Japan and the U.K. even as two other key market – the U.S. and India grow at triple-digit rates.

China has overtaken Germany has the country with the highest cumulative installations globally at 47GW, and has also beaten Germany every year in annual installations since 2013.

In the top 5, Italy has been overshadowed by others as its annual installations have dropped to less than 500 MW and the U.K.’s position is threatened by major pullback in policy support for solar.

Japan and the U.S. are now close on the heels of Germany and are set to push the country  further down the rankings in the future. China was the largest solar market in 2015 with a 34% market share.

The top five countries will make up 75% of global demand in 2016. In 2016 China will retain its top spot but it’s share will fall to 26% because of a demand spike in the U.S. tied to the Investment Tax Credit there. The U.S.’s demand spike in 2016 pushes it to number two in demand globally with a 24% market share, almost rivaling that of China this year. The U.S. displaces Japan in 2016, as the latter’s demand begins to fall this year due to pullbacks in its FiT.

The global demand landscape is set for a substantial diversification as growth is picking up beyond the major markets with the potential to offer 2GW+ each by 2020.

Latin America is leading the charge with new markets like Mexico, Brazil and Chile set to add a total of 21 GW by 2020.demandmonitor_q216_sitegraphic_baja

The Middle East and Turkey (MENAT) will add 16GW from Algeria, Turkey, Jordan, Egypt and the U.A.E.

In Asia, Thailand, Philippines, South Korea, Taiwan and Indonesia add 15GW by 2020 apart from the giants China, India, Japan and Australia. East Asia, led by China, but also bolstered by Japan, South Korea, Taiwan and Australia was responsible for the majority of global demand in 2015 at 58%. East Asia will retain the lead but will loose considerable market share in 2016 to South Asia because of India’s doubling of demand and to North America because of the U.S.’s demand spike.

Europe is set for a turnaround in the years ahead after having lost considerable market share in the past years, culminating in a 5% loss between 2015-2016. Latin America offer exceptionally high growth – it will grow 100% in 2016 and 28% on a compounded basis between 2016-2020.

With its latest auction, Mexico has taken a leap and is set to match Brazil with a cumulative 7 GW of demand until 2020. Latin America also offers several smaller markets that offer opportunistic demand of a cumulative 3 GW between Central America and the Caribbean. In the rest of South America, Argentina and Peru are emerging as strong demand markets.