Solar investment is falling

18 July 2018

Investment in solar energy around the world is likely to fall in 2018 owing to falling capital costs and a slow-down in the Chinese market.

Analysis by Bloomberg New Energy Finance (BNEF) indicates that while investment in wind energy and other clean technologies continues to grow, solar energy investment in the first half of 2018 fell by 19 per cent compared with the same period in 2017.

The trend indicates that that world solar installations in 2018 could fall for the first time on record, BNEF analysts say.

In the first half of 2018, investments in solar energy reached $71.6 billion. Investments in wind energy reached $57.2 billion, a 33 per cent rise on the first half of 2017.

The slippage in solar reflects two main developments: significantly lower capital costs for photovoltaic projects, and a cooling-off in China’s solar boom.

These trends are set to gather pace in the second half of the year, BNEF says.

Justin Wu, head of Asia-Pacific at BNEF, said: “On June 1, the Chinese government released a policy document restricting new solar installations that require a national subsidy, with immediate effect. We expect this to lead to sharp drop in installations in China this year, compared to 2017’s spectacular record of 53 GW.”

Pietro Radoia, senior solar analyst at BNEF, added: “It will also mean overcapacity in solar manufacturing globally, and yet steeper price falls. Before the Chinese announcement our team was already expecting a 27 per cent fall in PV module prices this year. Now we have revised that to a 34 per cent drop, to an end-2018 global average of 24.4 ¢/W.”

In the first half of 2018, China invested $35.1 billion in solar, down 29 per cent from 1H 2017. However, BNEF expects the full extent of the government-ordered cutback to become clear only from the second half of the year onwards.

The jump in wind power investment in the first half of 2018 came thanks to a stream of large project financings from the US to Taiwan and from India to the Netherlands and Norway. The headline deals included $1.5 billion for the 731.5 MW Borssele 3 and 4 offshore wind farm in Dutch waters, $1 billion for the 478 MW Hale County onshore wind project in Texas, and $627 million for the 120 MW Formosa 1 Miaoli project (the first offshore wind array to be financed in the sea off Taiwan).

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