IHS Markit: The global solar EPC market continues to fragment (Sterling and Wilson takes top spot)

By Josefin Berg, Research & Analysis Manager, Solar & Energy Storage, IHS Markit

solar EPCs

India-based Sterling and Wilson ascended to the top position in the global solar engineering, procurement and construction (EPC) market in 2018, as the company’s PV installations more than doubled for the year.

Sterling and Wilson’s PV installations rocketed by 127 percent last year, reaching 2.7 gigawatts (GW), up from 1.2 GW in 2017, according to the Solar EPC and O&M Provider Tracker. This allowed the Indian company to surpass China’s TBEA Xinjiang Sunoasis as the largest EPC provider globally. TBEA Xinjiang Sunoasis had occupied the market’s top spot from 2015 through 2017.

“Sterling and Wilson’s rising market share come partly as the result of the company’s continued leadership in India’s expanding photovoltaic (PV) market,” said Josefin Berg, research & analysis manager, Solar & Energy Storage, at IHS Markit. “EPC solar installations in the country rose by 39 percent last year. However, Sterling and Wilson also benefitted from large overseas projects, most notably the 1.2-gigawatt (GW) Sweihan project in Abu Dhabi—which will be the world’s largest solar plant when operating.”

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Company market share rose to 2.9 percent in 2018, up from 1.3 percent in 2017.

TBEA Xinjiang Sunoasis maintained a global market share of 1.6 percent in 2018, down only slightly from 1.8 percent in 2017, despite last year’s slowdown in the Chinese market. Overseas projects in countries like Egypt offset some of the company’s domestic market decline.

Inverter manufacturer Sungrow also demonstrated the rising prominence of its EPC business by ranking second in China and third globally with a 1.3 percent market share.

Fragmentation increases

The 30 largest EPC providers in 2018 installed 19 GW of non-residential PV, representing 21 percent of the total market. This slight decline from 23 percent in 2017 demonstrates the increasing fragmentation of the EPC market on a global scale.
Non-residential PV growth presents opportunities

In 2018, the non-residential PV market outside of China expanded by a robust 34 percent, mainly as a result of growth in India, Australia, Europe, the Middle East and Latin America. This has enabled established EPC providers to grow globally, but also has opened up opportunities for local entrants. Seven of the 15 largest companies outside of China—including Sterling and Wilson, Risen Energy, ACS, Acciona and BayWa—installed projects in more than one region, an indication of the growing internationalization of the EPC market.

— Solar Builder magazine

U.S. set to pass South Korea as world’s largest grid-connected battery energy-storage market this year

globaldata solar index

The United States in 2019 will become the world’s largest market for grid-connected battery energy storage as solar-plus-storage and peaking capacity requirements drive increased procurement, according to IHS Markit.

Deployments of grid-connected energy storage in the United States this year are expected to amount to 712 MW. This represents a near-doubling from 376 MW in in 2018. On the strength of this performance, the United States will surpass South Korea, which will see the market drop below 600 MW or even significantly lower.

The increasing market activity in the United States is being propelled by significant regulatory and policy developments as well as the diversification in major applications and geographic activity.

U.S. market charges up

 

The strong performance in 2019 represents a complete turnaround from 2018, when U.S. deployment stagnated and South Korea boomed. The year 2018 set a record for grid-connected battery energy storage as global installations nearly doubled, largely driven by growth in South Korea in the first half of the year. However, growth in the United States was slower, with deployments increasing by only about 22 percent.

In 2019, several major factors have come into play to fuel U.S. growth, including:

• Federal policies such as FERC Order 841 are driving regional grid operators across the country to incorporate additional market mechanisms that will enable more participation of energy-storage resources in wholesale market activities.
• The investment tax credit (ITC) currently available for solar is driving the development of a rapidly growing utility-scale solar-plus-storage project pipeline, particularly in the Western United States.
• State-level energy storage mandates and incentives to help kickstart development in progressive markets that are also wrestling with relatively high levels of renewable energy penetration.
• Utilities are ramping up procurements of both behind-the-meter and front-of-the-meter energy storage resources to integrate higher levels of renewables and provide additional grid services such as demand response.

Solar-plus-storage drives US energy storage market in the coming years

IHS storage stats

IHS Markit expects over 2 GW of energy storage to be paired with utility-scale solar photovoltaic (PV) systems from 2019 to 2023 in the United States. The availability of the ITC through 2023 for battery-storage systems coupled with solar PV has spurred development over the past year and will be the primary driver of co-locating utility-scale PV with energy storage. The majority of these systems are projected to be deployed in markets across the Western United States, including Hawaii, California, and Arizona, enabling further integration of PV in relatively saturated markets.

In terms of installed PV capacity, 10 GWdc of utility-scale PV installations are forecast to be paired with energy storage from 2019 to 2023, accounting for 16 percent of utility-scale PV installations during the period.

Cost synergies and operational efficiencies for pairing the two technologies can provide significant value, but they are overshadowed when comparing the opportunity of reducing the capital costs of energy storage by up to 30 percent with the ITC.

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DC-coupled systems can have a small, but significant cost advantage over AC-coupling depending on system size and characteristics, with the primary benefits including the reduction of power conversion equipment required and the ability to recapture DC energy otherwise clipped. AC-coupled systems are better suited for flexibly participating in a wider array of ancillary services, while both system types can leverage the ITC and benefit from shared installation and operational costs.

In terms of the 30-year levelized cost of energy (LCOE), IHS Markit estimates that adding 25 MW / 100 MWh of energy storage to a 100 MWac single-axis tracking PV system in 2019 could increase the pre-ITC cost of energy by 35 to 40 percent, assuming the battery system is replaced after 15 years. After accounting for installation and operational synergies of DC-coupling and applying the ITC to the cost of both solar and energy storage, an LCOE below $40/MWh can be achieved.

By 2023, IHS Markit forecasts solar-plus-storage will be a competitive resource compared to new natural gas resources in the United States.

Camron Barati, senior analyst, solar and energy storage, IHS Markit

— Solar Builder magazine

IHS Markit: Outlook for energy storage strengthens due to demand for utility-scale solar co-location

Bloomberg storage prediction

The year 2018 set a record for deployment of grid-connected battery energy storage. Global installations almost doubled, especially driven by growth in South Korea in the first half of the year. The four largest markets in 2018 were South Korea, the United Kingdom, China and the United States, together accounting for more than 60 percent of total installations.

In 2019, IHS Markit is already observing a significant acceleration in market activity driven by significant regulatory and policy developments, as well as the diversification in major applications and geographic activity.

Developments include:

• The market showed a strong performance in 2018 owing to project delays shifting installation from 2017 to 2018, and an uptick in the front-of-the meter segments in the United States, China and South Korea in the second half of 2018. Stronger outlooks in the United States, China and residential markets in Japan and Australia mean that the total forecast has been increased by 3.53 GW from 2019 to 2025 (compared to the previous first-half 2018 edition of the report).

• The United States will grow to be the largest market in 2019, as solar-plus-storage and peaking capacity requirements are driving procurement.

• Historically, specific countries were dominated by utility-scale projects (United States) or behind-the-meter residential installations (Japan or Germany). However, IHS Markit predicts a more even split between sitings to evolve. Stronger drivers for renewable co-location mean that IHS Markit expects front-of-the-meter installations to account for more than 50 percent of annual additions over the forecast period.

• Frequency regulation kickstarted the global energy storage market, but renewable enhancement is becoming the dominant application. With new applications such as peaking capacity, time-shifting renewable generation and transmission and distribution (T&D) infrastructure enhancement becoming feasible, battery solutions with durations longer than two hours are becoming increasingly dominant, as seen in South Korea, China and the United States. Short-duration systems will continue play a valuable role for providing frequency regulation and ramp-rate control.

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• Pressure on Li-ion battery prices has softened at the start of 2019 as cobalt prices have decreased, new production capacity has come online and a continued shift towards lithium iron phosphate (LFP) has influenced global average pricing. Supply, especially in Europe, remains constrained, as total demand for Li-ion batteries continues to accelerate in the stationary and electric vehicle (EV) markets. Li-ion is the most cost-effective technology, but as long-duration applications are becoming more valuable, alternative technologies will become more competitive.

Following are the key battery energy storage global trends now emerging:

1. The solar-plus-storage market is flourishing, kickstarted by the investment tax credit (ITC) in the United States and renewable energy credit (REC) multipliers in South Korea.

2. Virtual power plants are moving from pilot and demonstration phases to real deployment, as software companies are acquired and integrated into utility business models.

3. Fire safety and the development of internationally applicable standards are becoming key challenges for the industry.

4. Exploiting synergies with the growing demand of EVs will be crucial for the growth of energy storage.

Julian Jansen, research and analysis manager, energy storage, IHS Markit

— Solar Builder magazine

IHS Markit: Global solar PV market will return to double-digit growth in 2019

global solar data
The global solar photovoltaic (PV) market is set to bounce back from single-digit growth in 2018 to 25 percent growth in 2019, reaching 129 gigawatts of solar installations, according to global business information provider IHS Markit. This revived growth comes mainly from markets outside of China, which are forecast to rise by 43 percent in 2019. Spain, Vietnam and other countries have 2019 deadlines for project completions, as falling module prices at the end of 2018 have led to increased demand.

Given the current indications of development activity, China, the world’s largest PV market, could grow by 2 percent in 2019, after reaching 45 gigawatts in 2018. The majority of these installations would come in the second half of the year, according to the latest “PV Installations Tracker” from IHS Markit.

“Right now, the outlook for China remains highly uncertain, as the new support scheme for PV is yet to be announced,” said Josefin Berg, research and analysis manager, IHS Markit. “Plans to focus policy more on unsubsidized PV systems could slow near-term deployment, unless strict construction deadlines are imposed to spur 2019 demand.”

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The United States is forecast to overtake India in 2019, to once again become the second-largest PV market. As the 30 percent investment tax credit (ITC) ends this year, some projects will rush to meet completion. However, the safe harbor provisions introduced in 2018, which require a 5 percent investment to be made by the end of 2019 to enjoy the full ITC rate, have also shifted projected installations from 2019 to later years. “Increasing project development activity shows that the years after 2019 will be booming,” Berg said.

In India, the push toward lower tender prices, at a time when components have become more costly through safeguard duties, has delayed several tenders and could shake up the future Indian solar PV market. Europe is the region with the largest upswing over the past year, after the minimum import price on modules ended. Installations grew by 23 percent in 2018, reaching 12 gigawatts and is forecast to surpass 19 gigawatts in 2019. The revived utility-scale market in Spain alone makes installations almost 60 percent of growth in the region.

— Solar Builder magazine

Global solar PV tracker market: Shipments exceeded 20 GW for first time in 2018

RPCS solar tracker project

RPCS solar tracker project

Global unit shipments of single-axis solar photovoltaic (PV) trackers increased by over 40 percent in 2018, surpassing 20 gigawatts-dc (GW) globally for the first time. While the United States continued to be the largest individual market for single-axis trackers last year, shipments also increased in Mexico, Australia, Egypt, Spain, and other large utility-scale markets.

The Americas was the largest regional market, accounting for more than half of global PV tracker demand. However, the growth rate was strongest in the Middle East and North Africa. PV trackers accounted for over 25 percent of global ground-mount installations for the first time.

The top 10 suppliers continued to benefit from greater adoption of PV tracker technology, and all of them achieved higher year-over-year shipment volumes in 2018. NEXTracker continued to lead the market, for the fourth year in a row, accounting for 29 percent of global PV tracker shipments. As was the case last year, Array Technologies was the second largest supplier in the market, followed by PV Hardware, Arctech Solar, and Soltec.

Seven PV tracker suppliers exceeded annual shipments of 1 GW in 2018. Longstanding members of this gigawatt-scale group – NEXTracker and Array Technologies – were joined by Soltec in 2017. Now PV Hardware, Arctech Solar, NClave, and Convert Italia have crossed the same threshold.

In 2018, many suppliers reaped the rewards of investing heavily in international expansion in prior years, to take advantage of high-growth, utility-scale solar markets in Mexico, Australia, Egypt, Spain and other countries. Because the PV tracker market can be very relationship focused, suppliers that made early in-roads with developers and EPCs in international markets benefitted from strong global growth.

As a result, financiers and end-customers in emerging markets adopted tracking systems at a rapid rate – particularly in the Middle East and North Africa – leveraging the experience of more mature utility-scale markets.

The coming year will continue to be an exciting time for PV tracker suppliers, as they continue to take advantage of tailwinds associated with the growing adoption of high-efficiency modules and bifacial technologies that will ultimately lower the dollar-per-watt cost of PV tracking systems and improve the economic viability of the technology.

In recent years, ArcelorMittal (Exosun), Flex (NEXTracker), Trina Solar (NClave) and other large companies have entered the PV tracker market through acquisition, as the technology has matured and the installed base has increased rapidly. Global utility-scale solar installations are forecast to increase by nearly 30 percent, reaching 74 GW in 2019, which will lead even more suppliers to expand internationally and attract new entrants to the market.

— Solar Builder magazine