Global photovoltaic installation capacity forecasts for 2020 have been cut by nearly a fifth due to the impact of the coronavirus pandemic, said Wood Mackenzie.
The analyst outfit has downgraded its forecast for installations this year from 129.5GW to 106.4GW, a reduction of 18%.
Wood Mackenzie principal solar analyst Tom Heggarty said: “Next year will be a challenging one for solar, too. We assume that the economic damage caused by the pandemic and concurrent crash in oil prices will tip the world into recession in 2020.
“Although we expect a strong economic recovery next year, projects that should be delivered in 2021 are being developed and financed today. When the recession hits, not all activity will go ahead as planned.”
Demand reduction will be offset to some degree by the “spill-over” of delayed projects from 2020 to 2021, said Heggarty.
“Nonetheless we have reduced our 2021 forecast from 127.2GW to 123.6GW, down 3%.”
Heggarty said the impact of the disruption caused by the pandemic will vary by country. In China, where the outbreak originated, economic indicators suggest a recovery is underway.
“Wafer, cell and module production is ramping back up towards full capacity and construction at many project sites has resumed,” Heggarty said.
Wood Mackenzie does not expect the impact on the Chinese PV market to continue beyond the end of the second quarter this year.
In Europe and North America lockdowns in some form or another are likely to last “well into the second quarter and possibly into the third”, said the analyst.
“Other regions such as Latin America and Africa have – as yet – been less affected by the coronavirus outbreak. Nonetheless we anticipate severe disruptions in these regions too as we move towards the middle of the year,” it stated.
Wood Mackenzie predicts utility-scale projects under construction will be the first to “feel the impact” as lockdown measures delay or halt progress.
“For projects at such a late stage of development, however, we should be mostly talking about interconnection delays rather than cancellations,” Heggarty said.
He said the picture looks more challenging for earlier stage development.
“Auctions are being delayed, power purchase agreement negotiations halted and permitting is slowing down. Weak power prices and collapsing foreign exchange rates are severely damaging the economics of new investments across a wide range of countries. Projects that were slated for 2021 will be tougher to bring to market on time, if they make it at all,” he added.