60% of 5-Year PV demand forecast could be impacted by trade disputes
As we have recently noted, 3GW of the U.S. PV pipeline is directly at risk from ongoing trade actions against China and Taiwan. At the recent NPD Solarbuzz North America PV Conference, a variety of industry players – ranging from upstream technology and module production companies to downstream project developers – were able to discuss the potential ramifications of global trade investigations, as well as strategies to deal with the outcome of these cases.
The main reason that PV industry players are concerned about trade investigations (beyond the fact that they create uncertainty in the industry) is that they have the potential to impact the long-term demand potential of the PV end-market.
The figure below illustrates the degree to which the cumulative long-term demand forecast could potentially be affected by the ongoing trade investigations.
The ‘Affected’ percentage represents the amount of demand that is forecast to occur in markets that already have some sort of trade related barrier in place. The ‘Potentially Affected’ segment shows markets that have other policies in place, such as domestic content regulations, that could result in future trade disputes.
The ‘Currently Unaffected’ segment contains the cumulative demand over the forecast period that is located in markets that currently do not have any current trade restrictions, or policies in place that are likely to spur any full-blown trade investigation.
However, even these markets are not guaranteed to remain unaffected, and it is always possible that investigations could be launched if local manufacturers see market-share declines and choose to lobby local policy makers to instigate a review of imported component supplier practices.
While the efficacy (and ultimate impact) on demand has to be examined at the individual market level, the key takeaway is that trade investigations have already altered a significant number of country end-market demand forecasts, with the potential for increased countries to be subject to these issues.
Understanding trade barriers at the country-level is imperative for both suppliers and developers. With no sign of trade disputes escalating further, contingency plans are now becoming key issues for the entire solar industry to consider as part of long-term strategic planning.
Forecasted 5-year solar PV demand by trade impact status