The ongoing global energy crisis has highlighted the need for more resilient energy systems. To address this issue, there is an urgent need to transition towards renewable energy. According to the International Energy Agency, investments in clean power generation resources could increase by 7% in 2023, reaching USD2.75 trillion. However, there is still a lot more that needs to be done to balance the demand and sustainability in energy generation and consumption cycles.

Currently, demand pressures are affecting the short-term through high fossil fuel prices and a competitive environment for supply chains. While countries may be tempted to address their immediate issues, it is important to remember the longer-term priorities of sustainability and resilience. A deliberate and focused policy push is needed to achieve this goal. Globally, oil and gas companies are seeing almost 10% higher investments this year, with projected cumulative profitability crossing USD2 trillion.

The increased push for renewable energy projects in several markets is a positive sign. Utility-scale power projects, such as those based on wind and solar, are the most important, given the burden on power generation for its fossil fuel dependence and emissions. Mature renewable energy technology options, such as solar PV, are instrumental in scaling up the share of clean energy at competitive costs. Furthermore, hybrid configurations involving solar-plus-storage or even wind-plus-solar-plus-storage, are increasingly making commercial sense for the flexibility and dispatch that were long regarded as the bane of renewable energy projects.

Although the optimistic outlook for the energy market and solar PV is promising, there are still some challenges that must be addressed. High borrowing costs, a potential recession, and adjustments in pricing across the supply chain all contribute to a difficult road ahead. However, these are issues that must be endured until market forces can balance out. We believe that capital flows in the energy market, and specifically in solar PV, will ultimately align with fundamental principles rather than short-term shocks and concerns. As a result, we do not anticipate any significant changes in investment commitments.

PAF’s Annual Primer series aims to offer an overview of the demand drivers, opportunities, challenges, and outlook prevalent in various major markets for different renewable energy technologies, including solar PV and onshore wind. We hope you find our annual review of Global Solar PV informative and enjoyable to read.