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

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.

Saudi Arabia opens new logistics zone in Jeddah

Updated 13 October 2019

Saudi Arabia opens new logistics zone in Jeddah

  • The Al-Khomra zone extends over 2.3m square meters in Jeddah
  • It will support activities around shipping, freight distribution and transport of goods

RIYADH: Saudi Arabia launched on Sunday a new logistics zone open to private investors in the Red Sea port city of Jeddah, as part of a wider industrial initiative to diversify the economy away from oil and create jobs for Saudis.
The Al-Khomra zone — which will support activities around shipping, freight distribution and transport of goods — extends over 2.3 million square meters in Jeddah, home to one of the Kingdom’s largest ports.
As the biggest logistics zone in the country, it hopes to turn Saudi Arabia into a global logistics hub and create 10,000 direct jobs, said Minister of Transport Nabeel Al-Amudi.
It is part of the broader National Industrial Development and Logistics Program (NIDLP), which aims to create 1.6 million jobs and attract investments worth SR 1.6 trillion ($427 billion) over the next decade. Of that, SR 135 billion is earmarked for investment in the logistics sector.
Under its ambitious reform strategy, the Kingdom plans to have the private sector operate much of its transport infrastructure, including airports and sea ports, with the government keeping a role as regulator.
Details of what the government plans to offer investors in Al-Khomra were not disclosed, but the Saudi Ports Authority  (Mawani) said the zone would offer opportunities to investors on a lease basis.
“Investment in the logistics zone in Al-Khomra and other ports will total SR 7 billion,” said Saad Al-Khalb, president of the Saudi Ports Authority.
Al-Khomra joins other logistics zones in the `kingdom — the King Abdullah Economic City north of Jeddah has its own port and offers logistics investments and NEOM, a mega project announced in 2017, has plans for a logistics zone.
Over a decade ago, the Saudi government spent $30 billion to build six economic cities across the Kingdom to diversify the economy, create jobs for young Saudis and attract foreign investment, though many of the projects have failed to achieve expected results.
After decades of spending on development projects, the government has made attracting greater foreign investment a cornerstone of its Vision 2030 plan.