According to the researchers at IHS, global solar might hit 500 GW in total installed capacity by 2019. This year, 2015, global solar demand is projected to increase to 75 GW alone, a 66% growth rate against 2014. In 2014, the largest markets were China and Japan. The researchers think that they will also remain the largest markets in the next 5 years. India, in their view, will be only the 6th largest market.
- 500 GW of solar by 2019 projected, in 2015, there could be an additional 75 GW of solar built
- Global demand for solar will stabilize as growth is driven by more markets and by economic fundamentals
- Our view on India in the next five years is more optimistic (30 GW) than that of IHS (14 GW)
In addition to the demand predictions, IHS projects that the cost of crystalline solar cells will fall by another 27% until 2019 and that the market share of thin film will fall to 7% (refer).
On the demand side, the main growth is to come from China with over 85 GW, Japan with 45 GW and the US with around 40 GW. According to ISH, the UK and Germany will be ahead of India, which the researchers project will add only 16 GW in the next 5 years. This is 1/6th of the Indian government’s target of 100 GW.
Our projections on solar in India are much more optimistic (even, if we don’t buy the government’s target numbers either). In our view, the main drivers in India are the strong economic fundamentals of solar, which is already competitive in a number of states, the rapidly rising power tariffs (discoms still have an accumulated debt of $ 50 bn) and the falling cost of solar. We think that India will in the next five years add around 8 GW of distributed rooftop solar. In addition, we believe that it can be a 3-5 GW a year market for utility scale projects in the next 5 years (it will be a 3 GW market in 2015), bringing the total to around 30 GW – even with half-decent government policies. That would make India the fourth largest market after the US with a market share of 6%.
Of course, making projections is very difficult, because politics still plays a crucial role. For instance, if the Indian government is serious about reaching the 100 GW target, it could achieve that through a mixture of policies such as enforcing renewable supply options (hitting mostly the financially stable public sector power generators), making available preferential, cheap and long term financing through interest rate subsidies, building large solar parks across the country or rationalizing India’s electricity tariffs. In that case, with 100 GW, India would be the world’s largest market.
Tobias Engelmeier is the Founder & Director of BRIDGE TO INDIA