ENERGY TRANSITION

PAF Global Solar PV Market Review

2022

About

The report provides an insight into the Global Solar PV market. The findings of the report are based on research conducted by Pan American Finance (PAF) and its research partner Alchemy Research and Analytics. The report provides an overview of the Global Solar PV industry with insights on prevailing market conditions encompassing recent trends and drivers, challenges, and outlook in major countries across Europe and Americas. The report starts with a high-level view on the dynamics of the industry, touching upon the regional variations and analyzing the implications of the same. It then profiles the major markets country-wise, to provide a holistic view of the state of the industry in these countries, highlighting the growth opportunities, demand drivers and prevalent challenges. Macroeconomic data was sourced from the publications of multilateral institutions such as the International Monetary Fund (IMF). The industry-specific data is attributed to industry associations, Government authorities / statistical departments, Bloomberg New Energy Finance (BNEF) and International Energy Agency (IEA). This was supplemented by news reports, trade journals and related sources.

The report is an outcome of a collaboration between PAF and its research partner Alchemy Research and Analytics and was completed between May and August 2022.

We would like to thank the following executives for their contribution in preparing the report:

  • L. Warren Pimm, CFA
    Partner & Sr. Managing Director
    Pan American Finance
  • Pedro Obregon
    Vice President
    Pan American Finance
  • Tapas Bhowmik
    Senior Manager
    Alchemy Research and Analytics
  • Souradeep Basu
    Associate Manager
    Alchemy Research and Analytics
  • Rugvedi Desai
    Senior Analyst
    Alchemy Research and Analytics
  • Maurya Mukherjee
    Senior Analyst
    Alchemy Research and Analytics

Executive Summary

Solar PV Becoming the Most Popular Renewable Technology

The current backdrop of global energy crisis apparently brought solar PV to the fore instead of causing a reversal. BNEF projections, revised upwards by 7.5% from those in beginning of the year, suggest 245GW of new PV capacity by end-2022. A slower growth in onshore wind (due to regulatory delays or infrastructure) adds to the equation reinforcing solar PV’s position in the evolving energy scenario. The fundamentals for solar PV market are thus being shaped by its relative position in the prevailing economic conditions. By most accounts, a predominant share of total global renewable capacity addition in 2022 will be through solar PV. Meanwhile, the market will evolve in varied ways in terms of the technology, business model, demand segments or cost economics.

Solar PV Prices are on a Downward Trajectory

Progressively utility-scale solar PV plants are cheaper than new coal-based generation capacity. As per the International Renewable Energy Agency (IRENA), almost three-quarters of the new competitively bid solar PV projects that are due for commissioning over the next two years will have prices lower than that of a newly built coal-based power plant. Such a cost implication can be understood in the context of a trend that shows 86% decline in the capital cost of solar PV projects during 2010-2021. The trend is likely to sustain with improvements in technologies as well as economies of scale.

Evolving Industry Dynamics

The maturity in the business sets a strong ground to phase out the policy support and incentives. The Chinese PV market’s planned phaseout of subsidies stands out as the notable example of the shift. In the European Union, all new utility-scale capacity allocations are done solely through the auction route. The unsubsidised merchant-based projects find greater traction than before. Closely related to this, is the advent of corporate power purchase agreements (PPA). Between 2018 and 2021, solar-based corporate PPAs rose by over three times in capacity. With greater market orientation, developers are trying out different technology configurations. One such trend is the deployment of hybrid projects – involving a battery- based energy storage project paired with solar-based generation unit. In other cases, hybrid projects involve a combination of the wind, solar and battery storage technologies

Regulatory & Policy Support is Vital Going Forward

While growth is almost assured, the path will be one of a rapid and often drastic transitions that will necessarily rely on enabling policy and regulatory interventions. Some of the areas of active policy focus requirement include transmission infrastructure (not only capacity but also stability), seamless international trade (ensure globalized manufacturing chains in solar equipment), and power market development/reforms. With different countries adopting their unique routes, it will be interesting to observe the emerging solar PV landscape in the overall energy system and its balance.

PAF Global Solar PV Market Review and Overview

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