China is making solar super cheap which could have an impact on ASX renewables
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Clean energy investment in Australia dipped 1 per cent to $4.1 billion in the first half of the year, due to massive falls in the price of solar panels.
Wind investment was up 33 per cent globally, but solar spending fell 19 per cent as buyers got more bang for their buck, according to new figures from Bloomberg New Energy Finance (BNEF).
The reason was partly due to China, where capital costs are falling for solar projects and a solar boom is beginning to cool.
Bloomberg thinks this is going to speed up in the second half of the year, which may impact ASX-listed solar stocks.
On June 1, the Chinese government restricted new solar installations that require a national subsidy.
Bloomberg expects to see a sharp drop in Chinese solar installations compared to 2017’s “spectacular” record of 53GW.
Current solar module manufacturing capacity will have to go somewhere, and it’s expected that panels will be exported globally.
“It will also mean overcapacity in solar manufacturing globally, and yet steeper price falls,” said Pietro Radoia, Bloomberg’s senior solar analyst.
“Before the Chinese announcement our team was already expecting a 27 per cent fall in PV [photovoltaic] module prices this year. Now we have revised that to a 34 per cent drop.”
However, a month later China also came out with its latest three-year action plan to curb air pollution by 2020, covering ever more cities in some of the worst smog-affected provinces.
Wood Mackenzie’s head of China research Prakash Sharma says they’re planning to retire 150 GW of coal power plants this year and are banning gas-fired combined heat and power plants because of fears around gas seasonal shortages.
Mr Sharma says renewable energy “continues to be favoured as a key enabler towards cleaner air”.