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Impact of the New Coronavirus Disease (COVID-19) on Global PV Market

Izumi Kaizuka, Principal Analyst, Manager, Research Division, RTS Corporation

11 June 2020

in Japanese

According to data announced recently by the International Energy Agency’s Photovoltaic Power Systems Program (IEA PVPS), the amount of solar photovoltaic (PV) generation systems newly introduced worldwide in 2019 totaled 115 GW in terms of DC capacity (solar panel capacity). There is a high possibility that the amount of new PV systems to be installed globally in 2020 will be smaller than the 2019 total of 115 GW due to the spread of the new coronavirus disease (COVID-19). Our company estimates that amount at 106-121 GW for 2020 but sees the possibility of the global PV market shrinking close to 90 GW under a pessimistic scenario which assumes a serious impact of the COVID-19 pandemic. But it is considered that the impact will be short-term and that the global PV market will be back on track toward an expansionary trend in 2021, allowing PV power to contribute further to global energy transition to renewables. This article summarizes the effects of the COVID-19 epidemic on the global PV market.

In China, the world’s largest producer of solar cell modules, some manufacturers reported declines in their plant operations and operating ratios following the extension of the Lunar New Year holiday period. However, plant-operating ratios recovered in general to the level of an industry average by the end of February, according to the China Photovoltaic Industry Association (CPIA). Reportedly, production and distribution in China almost normalized as of April. In the current global PV market, what is serious is the impact on the downstream sector where PV system installations are underway. Although situations greatly vary by country and region, delays in approval and work periods induced by city-wide lockdowns are reported in major PV projects regarding centralized PV power stations, or so-called mega-solar projects. Moreover, some planned tenders for PV projects have been rescheduled to later dates. In the sphere of distributed power systems, their installations remain stagnant in Europe and the United States, both main markets of this sector, for such reasons as inability to make investment decisions over PV system introduction for housing and business use amid uncertain economic prospects. These direct adverse effects are considered to fade away as the pandemic subsides, with some PV installations put off until 2021 and 2022.

Coupled with such direct effects, the global economic standstill has reportedly impacted as well. The development of new projects faces rising investment costs in the aftermath of sharp depreciation of local currencies stemming from erratic fluctuations in foreign exchange rates caused by the changing economic picture. Among countries that procure PV-related products quoted in the U.S. dollar, Mexico, Brazil and Australia have been hit hard in particular, and development of projects scheduled for connection to the power grid in 2021 may possibly be delayed or called off. Sagging power demand has led to increased restrictions on power output, adversely affecting the profitability of some existing PV projects, according to reports from the countries concerned. In Europe, solar power stations known as merchant PV plants, which sell power through an electricity trading market without depending on public subsidies, have been launched. But the changing power supply/demand balance has caused trading prices to fall, worsening project profitability and raising concerns that fundraising for new similar projects may become difficult.

Against that background, the transition to clean energy sources is feared to lose momentum. But this author believes that the trend of energy transition will not recede to a great extent. According to the International Energy Agency’s (IEA) “Global Energy Review 2020,” a report published recently on the impact of the COVID-19 outbreak on the global energy sector, the share of renewables increased while demand for coal, natural gas and oil plunged as a result of sharply reduced power demand. The ratio of renewables in global power output in the first quarter of 2020 rose to about 28% from 26% in the same period of 2019. In some countries, including Belgium, Italy, Germany, Hungary and eastern parts of the United States, hourly shares of renewables in electricity demand rewrote record highs, showing a remarkable rise in the role of renewables as a main power source meeting such demand. Solar PV power as a distributed source of electricity is expected to play a major role in a sustainable and resilient society that will be a basis of our future new lifestyle.

As the spread of COVID-19 infections draws near the end, recovery from the epidemic-induced economic slump has become the most important challenge for the future, and national governments over the world have come up with an array of initiatives to support it. For instance, the European Union (EU) has agreed to focus its post-pandemic strategy for economic recovery on transition to green energy and other measures. In this connection, the EU has urged member countries and related institutions to start work on a roadmap accompanied by an action plan for economic recovery, interlocked with its initiative against climate change, dubbed a “European Green Deal,” unveiled in 2019. In May, the European Commission indicated that the post-pandemic recovery strategy will feature green transition, among other initiatives. Specifically, it was made clear that the EU will solicit bids for renewable energy projects totaling 15 GW in the next two years. Green energy initiatives taken by other countries are shown in the table below.

The COVID-19 outbreak is evidently going to bring about great innovative changes in society. It is hoped that investment will be stepped up in technologies bearing a future and in new business models, not limited to the renewable energy. We would like to expect Japan as well to promote initiatives inspiring the realization of a sustainable, resilient society and contribution to measures addressing climate change.
 
Table 1 Countries proposing renewable energy, solar PV installations, etc. as economic stimulus​
Source: Surveys by RTS Corporation
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  • Izumi Kaizuka
    Principal Analyst, Manager, Research Division, RTS Corporation
    Izumi Kaizuka is the manager of Research Division of RTS Corporation, Tokyo. She has been Japan’s representative of Task 1, information exchange and communication working group of IEA PVPS since 2003. She is one of the authors of “IEA PVPS ApplicAtions”. She has been working for various research projects on PV for the government, agencies and organizations and manufacturers in Japan and overseas. She received PVSEC Special Award in Novemebr 2017 for her contribution of dissemination of PV power generation. She has been invited to various PV conferences in Japan and overseas; EUPVSEC, InterSolar, etc.
     

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