International Trade Project (Essay Sample)

International Trade Project
Author
Institution
International Trade Project
Introduction
The previous two years have been undoubtedly challenging for the companies operating in the solar industry. This time incorporated an inflection point in the overall development of the market. The level of demand increased by double digit figures largely due to the policies enacted in Japan and China. Despite the rising level of demand, the scenario remained difficult for suppliers (Twidell & Weir, 2015). The supplier base managed to consolidate even further through acquisitions, mergers and bankruptcies as companies strived with debt-laden balance sheets and rapid shifts in their consumer bases especially those away from their conventional markets. All the recent trends point towards the strengthening of recovery although the scenario is largely fragile. Policy support will continue to play a major role although the level of demand will incorporate concentration in only a few countries, thus rendering the industry significantly risky (Twidell & Weir, 2015). Despite this aspect, the rapid declines in the level of prices for solar panels has resulted in opening up the industry to a large number of countries globally. The industry will also benefit from the creative formulation and implementation of new business models (Twidell & Weir, 2015).
Global Trends
The last two years have seen the solar industry incorporate double-digit installation growth, a moderate degree of revenue expansion, a return to nearly respectable margins, the restarting of capital investment and the consolidation of the supplier base. Trends continue to indicate that the current year will see a shift of the industry from a fragile towards a healthier phase. The year 2014 was noteworthy for the dramatic shifts in the level of demand as evidenced by China, which installed more solar panels than the whole of Europe (Twidell & Weir, 2015). Other variations were predictable. The high level of growth realized in countries such as Japan due to a wide range of generous incentives triggered the expansion of the industry in the United States (Twidell & Weir, 2015). The resulting effect was different in emerging regions, which operate under different dynamics and drivers in comparison to the typical feed-in tariff markets of the previous years. The levels of growth was slow albeit steady in these regions. Predictions indicate that the current year will see rising demand in the level of installations. The projected demand will fall between sixteen and twenty-five percent for installations ranging from 53 to 57 GW (Costello, 2015). From a geographic perspective, the largest contributors to industry growth will be the regions of China, the United States and Japan, while the most significant contributors in terms of absolute growth will be India, China, and the United States. The underlying driver of growth in this context will continue to be the reduction of solar. The ongoing focus among countries on the diversification of energy mixes away from fossil oils and imported oil will most probably remain the same (Costello, 2015).
Despite the issue of grid parity continuing to rise in popularity, it will remain a minor aspect in terms of driving growth in the foreseeable future. Current projections indicate a slight growth of more than 1 GW of the total 53 GW installed worldwide although this growth will be unsubsidized (Costello, 2015). The largest number of solar energy installations in the next few years will derive their growth from feed-in tariffs despite the demise of a majority of mature markets such as Germany, which pioneered the approach. These predictions continue to indicate that only around six percent of the entire solar installations globally will occur without any incentives even in the year 2018 (Costello, 2015). Due to the pace of declines in the levels of prices realized within the industry and the widespread fame surrounding the issue of grid parity, these figures are remarkably low. While Japan, China, and the United States will continue to be the largest markets in the world for the next few years, some emerging countries will make the entry into the top ten. Projections indicate that countries such as Chile, which is increasingly becoming the driver of growth in the Latin American solar market, will be significant entrants into the industry (Costello, 2015). The entry of Chile and indeed other countries will present the industry with a considerable number of long-term risks especially with insufficient grid capabilities hindering the continued build up and the heightening financial risks on the current pipeline (Costello, 2015).
Industry Growth
The level of concentrated photovoltaic solar installations is projected to rise to around 800MW by the dawn of the year 2020. This figure is representative of an increase of up to 100 MW from the figures realized in the year 2012. The installation of both low concentration photovoltaic and high-concentration photovoltaic systems will grow at double digit percentages on an annual basis until the year 2020 (Costello, 2015). Current trends predict an accelerated degree of growth in the market. The projected thirty-seven percent growth will enable current installations to attain the 250 MW mark. This figure compares with the thirty-two percent growth, which was 137 MW realized for installations in the year 2013 (Costello, 2015). The most si...