A worker walks past a rooftop solar farm at the BYD Co. headquarters in Shenzhen, China. (Photographer: Qilai Shen/Bloomberg)

World's Solar Is About to Hit 100 Gigawatts Thanks to China

(Bloomberg) -- Solar is about to hit a milestone: Global installations are set to reach 108 gigawatts next year thanks to China, IHS Markit Ltd forecasts show.

Strong government support for clean energy in China, the world’s biggest market for solar, will continue to boost demand for panels, the London-based research company said in a report Thursday. The country’s hunger for renewables is so strong that almost half of the world’s panels are now destined for use there next year.

China’s appetite is both a blessing for solar and a curse. Solar developers could find it harder to line up supplies to build plants in other countries. And panel prices are set to rise in the first half of the year, threatening the economics of solar farms under development now, according to Edurne Zoco, research and analysis director for IHS Markit.

World's Solar Is About to Hit 100 Gigawatts Thanks to China

“Exceeding 108 gigawatts of PV installations is close to the top end of what can be achieved, based on the global polysilicon manufacturing capacity,” Zoco said. “Projects in some regions might be delayed or even canceled because market prices are higher than were estimated during the planning phase.”

Meanwhile, the U.S., the second-largest panel market, is facing policy uncertainty as President Donald Trump weighs imposing trade barriers on imported panels, a move that would shift the U.S. market. There’s also concern that tax reform proposals would threaten the solar market. Congressional tax negotiators said Thursday they’ve reached a tentative deal that would mostly shield the renewable energy industry from a provision that threatened to dry up financing for new projects.

India, the third-largest market, is considering anti-dumping duties for modules made in China and has announced tenders for projects that use local content. The measures may limit module supply over the next few years.

©2017 Bloomberg L.P.