Deutsche Bank’s solar industry analysts dramatically increase their predictions for the global solar PV industry, and state that the global solar PV sector is set to experience a second “gold rush” in 2014. Deutsche Bank forecasts that 46GW will be installed in 2014; for 2015, their forecast jumps another 25%, reaching 56GW.
2013 was a great year for solar, both globally and in the U.S. According to a recent report by NPD Solarbuzz, new solar PV installations in the U.S. reached a record-breaking 4.2 gigawatts in 2013. Can it get any better? According to Deutsche Bank and NPD Solarbuzz, yes it can!
In a new report, Deutsche Bank’s solar industry analysts have dramatically increased their predictions for the global solar PV industry, and stated that the global solar PV sector is set to experience a second “gold rush” in 2014. Deutsche Bank forecasts that 46GW will be installed in 2014; for 2015, their forecast jumps another 25%, reaching 56GW.
Deutsche Bank’s bullish predictions are in line with a recent optimistic report by NPD Solarbuzz, which said “Solar photovoltaic demand is poised for explosive growth in 2014, and is set to reach 49 gigawatts (GW), up from 36 GW in 2013.”
In fact, according to PV-Tech, “Deutsche Bank noted in the report that there was potential for demand to be higher than forecasted in 2014 due to the key markets of China, Japan and the US exceeding projected installation levels as markets build considerable momentum.”
The report by Deutsche Bank notes that the world’s three biggest solar markets, the U.S. — which NPD Solarbuzz named the leading solar market outside the Asia-Pacific (APAC) region — China, and Japan, are currently experiencing rapid growth and are likely to deliver “upside demand surprises.”
The analysists foresee that other nations will also make a considerable contribution to the global PV sector.
Deutsche’s analysts wrote: “Specifically within international markets, we expect India, South Africa, South America, South East Asia, Australia and other emerging markets to each contribute to over 1GW per market.”
“The majority of these markets are at grid parity and as such sustainable. Moreover, we believe some of the grid and financing constraints that have inhibited growth so far are set to improve in 2014,” the analysts concluded.
Deutsche named five key reasons for the raised forecasts:
- According to Deutsche Bank, solar is currently competitive — without subsidies — in at least 19 markets across the globe. The investment house predicts solar to reach grid parity in more and more markets globally as solar system prices continue to decline.
- The distributed generation business models that are common in the U.S. are set to become more pervasive in international markets. That should act as a significant growth catalyst in European markets, where subsidies have been significantly scaled back.
- Deutsche’s analysts noted that insufficient acces to low-cost financing has constrained the growth of the global industry so far. However, the availability of solar financing and its costs are set to improve from 2014 onward. Recently, SolarCity completed the industry’s first securitization of distributed solar assets, a move that is expected to pave the way for other solar companies to use securitization as a financing source. This new financing option should allow for further growth of the solar industry.
- The solar industry is set to experience a second “gold rush,” as solar installers are expected to acquire customers at an accelerated pace. “Just like upstream/midstream solar companies participated in the gold rush to add manufacturing capacity during the 2005-07 timeframe, we expect another gold rush to add recurring MW over the next 2-3 years, until the [U.S. investment tax credit] expires around 2016,” Deutsche’s analysts wrote.
- In constrast with the past five years — which were mainly focused on module cost reductions — the next 4 years are expected to be about reductions in the balance of system (BOS) costs, including the costs of inverters, as well as customer acquisition and financing costs.
According to RenewEconomy, Deutsche Bank expects solar system prices, financing costs, and the policy outlook to act as increasing tailwinds for the solar sector over the next 12-18 months.
The report stated: “Solar module prices are likely to remain at record low levels for the next 18 months and beyond that timeframe, we see some inflationary pressures driving prices higher…. While balance of system costs have room to decline further, we expect a rapid decline in these costs over the next 18 months and then expect inflationary wage pressures on overall costs…. Along the same lines, while overall financing costs have room to decline as solar moves down the risk curve and innovative financing structures drive down costs, we expect rising global interest rate environment from 2015 timeframe to drive upward pressure on overall financing costs.”
“Bottom line: we expect solar LCOE to reach a cash bottom over the next 18-24 months and expect a rush for installations during the corresponding period,” Deutsche Bank’s solar analyists concluded.