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Julianne Geiger

Julianne Geiger

Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.

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Goldman Predicts Major Solar Market Contraction

Sweltering temperatures and a ton of sun aren’t enough to make this a good year for solar, with Goldman Sachs chiming in—again—with a dismal prediction: Global solar installations will decline by 24 percent this year, the analysts say.

It’s not the first time this year that Goldman has come out with a negative picture for solar. And Goldman isn’t alone, even if it is throwing around the worst numbers. (Credit Suisse is forecasting a 17-percent decline, while Bloomberg NEF is anticipating a 3-percent decline).

If Goldman is right, it will be the first real solar market contraction, and China is making the biggest dent in demand because it took 20 gigawatts of projects offline in May, sending global installations down to 75 gigawatts from 99 gigawatts last year, Bloomberg reported, citing Goldman Sachs analyst Brian Lee.

“Lowering our coverage view to cautious, we believe oversupply is set to continue in the near-to-medium term as demand from the largest solar markets remains tepid,” Lee wrote.

Last month, Goldman said it expected a 40-percent drop in sales volumes in China. That’s a massive drop in a country that accounts for half of the global market for solar equipment and modules. Additionally, Trump tariffs on imported panels and modules are likely to lead to drops in demand in Japan, India, and the United States. Related: Oil Sector Under Fire In Libyan Corruption Crackdown

Solar victims of the U.S.-China trade dispute are already emerging. A case in point is Norway’s REC Silicon (REC.OL), which on Thursday reported a quarterly pre-tax loss of $374 million for Q2, compared with a $60-million profit the previous quarter, Reuters reported.

The company said the loss was “due to the market disruption from the curtailment of solar incentives in China, as well as continued trade barriers that prevent access to primary markets inside China”.

Even if Goldman’s doom-and-gloom scenario doesn’t make reality by the numbers, many investors will be wondering if it’s time to disembark from “solar coaster”, or wait for what’s next in the boom-and-bust cycles.

By Julianne Geiger for Oilprice.com

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Leave a comment
  • John Brown on July 20 2018 said:
    Sadly what this shows is that even with the price of oil at $70 Solar is nowhere near competitive from a cost perspective unless massively subsidized by the Government. With the price of WTI at $70 this should be a boom time for solar, but its not because Solar isn't anywhere close to being able to compete economically despite all the hoopla and articles lying to us about it. It really is too bad. We need renewables to start coming on board economically.
  • John Stevens on July 20 2018 said:
    John Brown.......all power is subsidized in some form. Article is about module over supply at a macro level, not price competitiveness at a project level.

    Cost of power generation from the facilities is pushing downward towards sub $35/mwh or lower in some markets
  • Frank on July 20 2018 said:
    The same thing was said this time last year, then it turned out all the "analyst's" predictions had in fact already been surpassed by mid-July and were 30-40% too low. Wall Street desperately needs oil&gas to remain viable and pay them fees&interest every year. Plus they're likely long oil....

    3 more years of leveraged pumping at most, then it all crumbles.
  • Scott Anders on July 21 2018 said:
    Oil is not fungible with solar. Virtually no oil is used for electricity production.

    Solar and wind are the majority of all new generation capacity globally. That will still be true if there's a market contraction.

    China is simply switching to a tender model, which they should have done long ago to be honest. China's solar ambitions are still huge, this is just a long-overdue policy reset.

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