2023

Global Solar PV Market Report

Outlook

Projected Solar PV Capacity

Most industry studies point to a massive build out in solar PV-based capacities globally. The projected scale varies across studies for assumptions in the pipeline, policy trajectory, methodology, etc. But there is a consensus about solar PV’s instrumental role in global renewable capacity growth For example, the International Energy Agency’s estimates as of June 2023 suggest that solar PV will account for approximately two-thirds of the new renewable energy capacities in 2023, with a similar leading role projected for 2024.

The scope is bigger than what the projections indicate. BNEF’s estimates on the net zero transition phase till 2050 indicate that the solar installations must rise at least three-fold by then, in conjunction with other technologies. The US-based National Renewable Energy Laboratory’s (NREL) workshop in early 2023 put forth 75TW in global solar PV requirement. Notably, the same group’s 2018 projection had anticipated 1 TW of capacity by 2023, a target that was met by the end of 2022. An acceleration in the rate of capacity addition is a critical need to have a reasonable chance of transitioning to a net-zero scenario.

Source: BNEF Global PV Market Outlook
Note: The data refers to BNEF projection under a ‘low-growth’ scenario

The utility-scale solar PV segment, while vital for achieving scale and reducing unit costs rapidly, may not be the sole growth driver as in previous years Recent experiences in major solar PV markets, such as China, reveal that the rooftop solar segment could assume a central role in accelerating PV capacity additions. The commercial and industrial consumers are driving such a demand. Residential consumers too play an important role, though often it is in the off-grid (or behind-the-meter) realm. About 100 million rooftops globally could accommodate solar PV installations, compared to the 25 million at present (IEA).

Emerging Capacity Configurations

The upcoming solar PV capacities are likely to be based on more than one technological configuration. In many solar markets, hybrid capacities are in serious consideration by developers and investors alike. Solar plus battery hybrid projects are one such option that garnered significant attention, especially in the US market, as battery storage developers sought to make take advantage of the investment tax credit on offer. The tax benefits have since been rationalized and the US IRA provides for incentives towards standalone batteries. Nevertheless, the significance of such projects is not lost. Co-located batteries with solar PV projects are important for their role in grid management services, such as arbitrage between the peak and off-peak prices, frequency management, among others.

With subsidy support waning across the markets, and greater exposure to market volatility, co-locating battery storage with solar PV makes a stronger case than before. This is one reason why many projects are also opting for retrofitting existing commissioned power generation projects with energy storage. About 60GW of battery-based energy storage could be commissioned by 2030, with a significant to be linked to renewable, and especially solar PV projects.

Energy storage is not the only avenue amongst prevalent hybridization options. Another one taking roots is the combination of solar and wind power generation projects. In December 2022, the world’s largest wind-solar hybrid (450MW, of which 420MW is solar-based) was commissioned in the Indian province of Rajasthan by Adani Green Power. Earlier in the same year, Iberdrola commissioned a similar project in Australia. Many others are in active consideration.

Some of the considerations in favour of such projects include reduced cost of land and transmission infrastructure and higher capacity utilization factors than those in the standalone wind or solar projects. The push for hybridization has been extended to hydro power projects as well. In June 2023, the world’s largest wind-hydro hybrid project was commissioned in China, with 1GW of solar PV capacity and 3GW hydropower generation. An added advantage of hydro and solar hybridization is the ability to combine hydropower’s peaking facility with cost-effective solar-based power generation.

The quest for cost-effective solar power generation has also motivated a rising new form of solar PV capacity known as floating solar PV. This refers to solar PV generation based on floating platforms situated on water reservoirs (including dams of hydropower facilities). In March 2023, an international group of researchers published their research findings on untapped energy potential from floating solar PV. It revealed an annual generation potential worth 9,434TWh from global reservoirs, with only 30% of their area covered. The top four countries in this regard are the US, China, Brazil and India. Significantly, the study demonstrated that in 40 countries, the potential generation from floating solar PV exceeds their total existing power demand.

Floating Solar PV Potential Globally

ource: PV Magazine

Issues and challenges ahead

The projected increase in solar PV capacity is subject to constraints of the global PV supply chain. It’s evident how utility-scale solar projects slowed down in the face of rising costs of material inputs, interest rates and the uncertainty in supply. To address this, a more diverse supply chain is necessary, given the current dominance of Chinese suppliers. Policies like the US Inflation Reduction Act incentivizing local manufacturing, along with similar efforts in European countries, aim to mitigate the concentration risk and enhance supply chain resilience.

There is a flip side to the ongoing global policy efforts aimed at localization (led by the US IRA). Global capital flow, which seeks maximum return, could be skewed by upfront government incentives. In the process, it risks an imbalance in global capital allocation. Many European countries, for instance, had to respond to the US IRA subsidy package after prominent investors seemed to make decisions solely based on available benefits. It is yet to be seen how and to what extent this stabilizes, as there is a wide range of investments that can be considered for subsidy allocation criteria. Nevertheless, localization remains a priority for the long-term viability and stability of the solar PV industry supply chain.

The projected investment requirements in solar PV also demand an expansion of grid infrastructure. IEA’s study (September 2022) indicates an average annual investment requirement of $600 billion by 2030 in the bulk power transmission networks globally to enable the net zero energy transition process. This is roughly double the present investment levels. Furthermore, the requirement in emerging markets or developing economies could be far higher, possibly requiring triple the current investment levels. The grid curtailment experience of some of the leading solar markets, including China’s, is sufficient proof of the upcoming challenges in integrating solar PV generation in the overall grid dispatch. The impact could be on project returns, as utility-scale PV projects are likely to be pushed towards low utilization levels when the grid connectivity is either inadequate or restricted compared to coal and other baseload fossil fuel power generation.

Trends and Drivers

Global Solar PV Market Report

Key Regional Markets

2023

Global Solar PV Market Report

Outlook

Projected Solar PV Capacity

Emerging Capacity Configurations

According to IEA, an average annual investment of $600 billion is required by 2030 in the bulk power transmission networks globally to enable the net zero energy transition process.

Issues and challenges ahead

Miami Office

London Office

Menu

Our Services

Industry Sectors