The global photovoltaic (PV) industry should prepare for new challenges, such as exacerbation of the overcapacity issue, and a period of uncertainty after Donald Trump becomes US president, says a Taiwanese analyst.
In a post on Wednesday TrendForce’s EnergyTrend division examines the expected changes in US policy that could have significant impact on the solar market. These include the end of solar subsidies and the introduction of extreme trade measures against China.
Thanks to the extension of the federal investment tax credit (ITC) for solar power to end-2022 PV demand in the USA is expected to be at between 8 GW and 13 GW per year in 2017-2019. The question is what happens after that.
Trump’s energy plan is focused on the use of domestic reserves of shale oil, natural gas and clean coal, while he is not hiding the fact that he is not a fan of renewables. EnergyTrend points out that the development of renewable energies is noticeably absent in the plan.
Celeste Tsai, analyst for EnergyTrend, says that with Trump in the White House there is “a strong possibility” that the US will end solar subsidies altogether, which would result in a rush to install PV capacity before the ITC cut-off date. “[This would be] followed by a freeze in domestic demand and a worsening of the current oversupply problem in the global PV market,” Tsai says.
Trump’s “America First” policies, on the other hand, are expected to lead to the introduction of protectionist measures targeting allegedly unfair trade practices by the Chinese government. China-made solar equipment is already subject to import duties in the US, but more extreme measures in the future cannot be ruled out.
“US solar companies are mostly EPC [engineering, procurement and construction] service providers and PV system integrators, so raising the trade barriers will increase their development costs,” Tsai says. Passing such increased costs onto consumers would hurt domestic demand and increase the pressure on the local PV industry, according to the analyst.
From the long-term perspective, EnergyTrend says, the US PV market is expected to contract significantly under Trump’s policies so oversupply will get worse.
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White House solar panels installation. Image taken from video on www.whitehouse.gov.
