Asia is expected to add 355 GW of solar capacity over the next five years

Solar deployment in Asia has experienced tremendous growth in recent years, especially in key markets
such as China, India and Japan.
Analysts at Wood Mackenzie Power & Renewables predict that solar demand will fall by 18% this year compared to 2017, with 59 GW
of new installed capacity.

The contraction in the region was mainly due to a 30%
drop in installations in the world's largest solar market due to a change in China's policy at the end of May.

With costs falling due to an oversupply of modules, China's solar growth is unprecedented, outpacing the ambition of 105 GW by 2020
.
The government has imposed quotas on 10 GW of distributed generation capacity this year, lowered FIT levels and shifted to tender-led solar prices
.
Nevertheless, China is expected to be the largest solar market
in the next five years.

The Japanese market also slowed
.
The initial high FIT led to an 80 GW solar installed capacity development program
.
However, due to the continued decline in module prices and developers claiming low margins in a high-cost environment, they delayed the grid-connected schedule to take advantage of the cost savings
.
In return, the Japanese government has re-evaluated the development plan to allow only projects with good business plans and can be connected to the grid
within three years.
As a result, the development plan has been reduced to 50 GW
.

Japan is also in the process of converting its FIT plans for more than 2 MW of projects into an auction mechanism
.
The last two tenders were reportedly not subscribed due to licensing regimes and connection time constraints, and all bids in the second tender were above the ceiling electricity price of $0.
14/kWh
.

In India, the government released significant news
this year about the installation of 100 GW of photovoltaics.
While current estimates suggest that this figure is unattainable by 2022, the country's solar growth is still very significant
.

The government has imposed a 25 percent safeguard tax on modules imported from Chinese and Malaysian manufacturing, and developers fear they will not be able to pursue development plans
at the same pace.

"The main trend we are seeing is the phasing out of subsidies and the transition to tenders, which has led to volatile demand in the region," said Rishab Shrestha, solar analyst at Wood Mackenzie, "Having said that, the Asia-Pacific region will still add 355 GW of solar capacity over the next five years, partly due to falling
global PV capital costs.
" ”

In this scenario, analysts estimate that the average cost of electricity (LCOE) will fall by 25% to about $5/MWh
by 2023.
This is expected to trigger more competition between solar and fossil-fuel-based electricity, driving demand in emerging markets in Asia, with Taiwan and Vietnam, as well as other markets with generous FIT regimes, seeing growth
in solar energy.