Since its domestic grid connections crossed the gigawatt mark in 2018, the Taiwanese solar energy market has come under international scrutiny, as the local government actively executes its two-year solar development program. The latest analysis from the EnergyTrend research division of TrendForce shows that cumulative PV installations in Taiwan reached 3.8GW in September 2019; the adjustments made in the 2020 draft of feed-in tariffs (FIT) are expected to help Taiwan achieve its goal of 6.5GW cumulative PV installations in 2020.
According to TrendForce analyst Sharon Chen, new solar installations in Taiwan since 2018 have been increasing at a rate of 12% QoQ on average, with a growth of 300MW QoQ. However, many grid connections in 2018 did not reach completion until late-1Q19 to early-2Q19. The effect of a late announcement of revised FIT in early 2019 was reflected in the additional new installations in 3Q19. However, owing to the massive amount of time required by early preparation work, only 297MW of new installations took place in 3Q19, a decline of 99MW QoQ, which demonstrated a lack of demand contrary to seasonality. Nevertheless, judging from the 955MW new grid installations from January to September 2019, total yearly grid installation capacity is expected to exceed 2018 numbers.
If the Taiwanese solar PV market were to reach a 6.5GW installation capacity in 2020, quarterly grid connections must exceed 550MW. Analyst Chen believes that the 3% overall tariff reduction in the new FIT draft is meant to prepare current mid- to large-scale projects for mass grid connection within the next two years. The Taiwanese solar PV market is expected to demonstrate three major trends, as follows:
Trend 1: Land mergers continue while feeder line placement and UHV construction depend on collaboration with EPCs
Early preparations for large-scale ground-mounted PV stations are time-consuming, especially in terms of land mergers and UHV construction. Part of the difficulty stems from the fact that the popularity of roof-mounted panels preceded ground installations in Taiwan. Also, local authorities and the central government require time to come to an agreement regarding solar PV policies. Thus, it takes more time and experience for large-scale project installations to become widespread. On the other hand, feeder line grid connections and UHV constructions are facilitated only through the collaboration between the Taiwan Power Company and private EPCs. Most mid-sized projects under 50MW are expected to commence in 3Q20, whereas large-scale ones will take place mainly in 2Q21 and 3Q21.
Trend 2: Module manufacturers increase market shares in Taiwan as prices fall incrementally
Owing to the consistent performance of the Taiwanese domestic market, module manufacturers from Taiwan have gradually adjusted their domestic and overseas sales strategies in the past two years by raising their shares in the domestic market above 60%. These manufacturers are projected to undertake no expansion plans or product innovations in 2020. Instead, conventional modules with power increase up to 10 watts will be the mainstream. Solar module prices are projected to decrease 6% YoY in 2020.
Trend 3: Overseas inverter manufacturers join the fray while extending warranty periods and increasing competition
As the global solar PV market becomes more and more diversified and stable, the Taiwanese solar industry holds increasing importance within it as well. With the stabilization of FIT, both the PV power plant market and the inverter market are hotly contested by overseas manufacturers. In an effort to win domestic orders and incentivize purchase, overseas inverter manufacturers have begun to extend the industry-standard five-year warranty to 10 years. Under these conditions, manufacturers that manage to secure contracts for large-scale projects will become major players in a hypercompetitive market.
