Friday, March 22, 2013

Deutsche Bank: "Sustainable" solar market expected in 2014

Analysts at Deutsche Bank have predicted that the global solar PV sector will transition from a subsidised market to a sustainable market within a year, citing the arrival of “grid parity” in a number of key markets, with unexpectedly strong demand and rebounding margins.

The Deutsche Bank team said key markets such as India, China and the US are experiencing strong demand and solar projects are now being developed with minimal or no incentives.  “While some risks around subsidy cuts in Japan and the UK market remain, we expect a more constructive outlook in most other emerging markets,” Deutsche Bank writes. “We see the sector transitioning from subsidised to sustainable markets in 2014.”
The key for Deutsche is the emergence of unsubsidised markets in many key countries. It points, for instance, to India, where despite delays in the national solar program, huge demand for state based schemes has produced very competitive tenders, in the 12c/kWh range. Given the country’s high solar radiation profile and high electricity prices paid by industrial customers, it says several conglomerates are considering large scale implementation of solar for self consumption.

“Grid parity has been reached in India even despite the high cost of capital of around 10-12 per cent,” Deutsche Bank notes, and also despite a slight rise  in module prices of 3c-5c/kW in recent months(good for manufacturers).

Italy is another country that appears to be at grid parity, where several developers are under advanced discussions to develop unsubsidized projects in Southern Italy.
With system prices between €1,500 to €2,000/kW, net metering for systems below 200 kW and "advanced" plans for unsubsidized projects in the south of the country, Italy also "appears to be at grid parity". "Assuming small commercial enterprises are able to achieve 50% or more self consumption, solar is competitive with grid electricity in most parts of Italy," says Deutsche Bank....
Deutsche Bank states that utilization rates in China are on the increase, as are polysilicon, wafer and module prices. In particular, with an "improving" supply outlook, it predicts that polysilicon pricing will be kept under control, although prices are expected to remain below US$25/kg. This trend should see companies like Wacker Chemie and Hemlock ramp utilization rates back up.

In terms of crystalline silicon modules, says Deutsche Bank, Chinese tier-1 prices have been increasing by between $0.03 and $0.05/W. Consequently, it says, Chinese module prices are over $0.60/W, while European module prices are over $0.70/W....
The German bank has raised its 2013 global solar demand forecast to 30 GW – representing a 20% year-on-year increase – on the back of suggestions of strong demand in markets including India, the U.S., China (around 7 to 10 GW) and the U.K. (around 1 to 2 GW), Germany and Italy (around 2 GW).

Rooftop installations are, in particular, expected to be a main focus, says Deutsche Bank. A trend for projects being planned with either "minimal/no incentives" has also been observed, despite the belief that solar policy outlooks are improving, particularly in the U.S., China and India, and "other emerging markets".

...Deutsche predicts margins will rebound, and suggests that several leading manufacturers will actually start producing, or at least talking about, profits in the second half of the year.

"Deutsche Bank: Sustainable solar market expected in 2014"

by Becky Beetz
PV Magazine
February 26, 2013
"Deutsche sees “sustainable” global solar market in 2014"
By Giles Parkinson
February 25, 2013

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