A year ago, 2017 and 2018 were supposed to be down years for the solar industry as the U.S. and China pulled back from extremely high installation levels and adjusted solar policies. Instead, this year will be a record year for the industry, and 2018 could be even better.
The Q4 2017 Global PV Market Outlook report from Bloomberg New Energy Finance (BNEF) estimates that 92 GW to 97 GW of solar will be installed globally in 2017, up from 75 GW a year ago. In 2018, they expect between 94 GW and 111 GW to be installed, and further growth to 107 GW to 121 GW in 2019. The future for solar energy still looks very bright globally.
Why solar energy is booming
You don’t have to look further than Mexico to see why solar energy is booming around the world. A recent auction resulted in a low bid of 1.92 cents per kWh of electricity, the lowest seen in Latin America and one of the lowest in the world. At under 2 cents per kWh, solar energy beats coal, natural gas, nuclear, and even wind (in some locations) on cost.
As solar energy becomes the economically viable choice for energy production, utilities, building owners, and homeowners are seeing it as the best option for new generation. And countries like China, India, and Mexico see it as a way to grow their economies.
Solar companies are being pulled by two threads
For the solar companies supplying modules and other components, the growth is certainly a positive. But it comes at a cost: the low economics means the price of solar panels and all other parts of the value chain have come under pressure. Leaders like First Solar (NASDAQ:FSLR), SunPower (NASDAQ:SPWR), and Canadian Solar (NASDAQ:CSIQ) aren’t having a problem selling all of the solar panels they can make. They’re having a problem turning those sales into consistent profitability.