Global solar forecasts lowered as China cuts support policies

China said it would not build any more solar power stations in 2018 and cut its feed-in tariff subsidy. (AFP)
Updated 07 June 2018
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Global solar forecasts lowered as China cuts support policies

  • China is the world’s largest producer of solar panels
  • Lower solar subsidies for producers will impact global installations

China’s unexpected move to slash incentives for solar power has sent stocks into a free fall and prompted analysts to lower forecasts for global installations this year amid expectations that a glut of excess panels would send prices tumbling.

China announced on June 1 changes to the subsidies that has underpinned its rise to become the world’s largest solar market in recent years.

IHS Markit, a market research firm, was preparing to lower its global solar installation forecast for this year by between 5 and 10 gigawatts, or up to 9 percent, analyst Camron Barati said. The impact in China, which accounts for half the global market, could be up to 17 GW, the firm said.

Another market research firm, Wood Mackenzie, said on Wednesday that China’s capacity additions would likely be about 20 GW lower than it had expected.

An oversupply of cheap Chinese-made panels that had been destined for domestic projects will help boost demand for solar in other countries and sop up some of the demand lost in China, IHS said.
But a drop in prices will leave manufacturers with razor-thin margins as they seek to unload their products.

“There will be a stressful environment for pricing in the near term,” Barati said. “Something like this certainly has global ripples.”

In April, IHS Markit forecast 2018 global installations would hit a record 113 GW, with 53 GW coming from China alone. China is also the world’s largest producer of solar panels.

But the Asian nation last week said it would not build any more solar power stations in 2018 and cut its feed-in tariff subsidy, which guarantees a certain price for power.


Solar investors reacted by selling off stocks. The MAC Global Solar index is down 7 percent this week. Chinese panel makers Canadian Solar Inc, JinkoSolar Holding and Yingli Green Energy Holding have been hit, as well as US panel makers SunPower and First Solar.

JMP Securities analyst Joe Osha slashed his rating on First Solar shares to “underperform” on Wednesday and cut his price target to $46 from $87.

The Trump administration’s 30 percent tariffs on solar imports will help support prices in the US, Osha said, but added that First Solar is seeking to do more business overseas and pricing everywhere could get very competitive.

“No business is insulated from market reality,” he said.


Paris Air Show: After Boeing showstopper, Airbus seeks order bounce

Updated 35 min 50 sec ago
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Paris Air Show: After Boeing showstopper, Airbus seeks order bounce

  • British Airways owner IAG signs letter of intent to buy 200 of its 737 MAX jets
  • Airbus is looking for up to 200 orders for the A321XLR, which is designed to open up new routes

PARIS: Airbus, reeling from the potential loss of a major customer for its best-selling A320neo as British Airways owner IAG placed a lifeline order for the grounded 737 MAX, prepared to hit back with more orders for its A321XLR on Wednesday.
The planemaker has been negotiating with US airlines investor Bill Franke whose Indigo Partners has also been known to place orders for multiple airlines within its portfolio and could reel it in for the Paris Air Show, industry sources said.
Airbus declined to comment.
After weathering intense scrutiny over safety and its public image, Boeing won a vote of confidence on Tuesday as IAG signed a letter of intent to buy 200 of its 737 MAX jets that have been grounded since March after two deadly crashes.
The surprise order lifted the energy of a previously subdued Paris Airshow, where the talk had been of the possible end of the aerospace cycle, given the issues at both Boeing and Airbus as well as geopolitical and trade tensions around the world.
Australia’s Qantas Airways said on Tuesday it would order 10 Airbus new A321XLR jets and convert a further 26 from existing orders already on the Airbus books.
Airbus is also in talks with leasing company GECAS and has been trying to secure an eye-catching order for the A321XLR from American Airlines, though the world’s largest carrier does not typically make announcements at air shows.
Airbus is looking for up to 200 orders for the A321XLR, which is designed to open up new routes.