Global solar PV installations will grow more than 20% by 2022 and surpass 200 GWDC according to a new report from the Clean Energy Technology Service at IHS Markit.
Until recently, falling costs for PV systems – which have fallen by more than 50% globally from 2013 to 2020 – have been a critical factor in the industry’s exponential growth, with global installed capacity increasing by 275% during that time. However, in 2021, PV system costs will increase by 4% year-on-year, posing new challenges for the fast-growing market.
Despite the higher-than-expected cost environment, installations in key markets such as China, India, the United States and Europe are once again driving expansion this year, with the largest growth coming from the distributed generation segment, led by China.
“The utility segment has been most affected in 2021, with several projects delayed or cancelled. In contrast, the strong growth of the distributed generation sector, i.e. the residential, commercial and industrial (C&I) sector, was one of the solar PV success stories in 2021 — fueled by the fuel crisis and rising electricity prices, particularly in markets across Europe,” , says Josefin Berg, research manager clean energy technology at IHS Markit.
IHS Markit expects solar PV installations to grow by double digits in 2021. Continued growth through 2022 – when installations are expected to exceed 200 GWDC barrier — would be the second year in a row with double-digit growth of global installations in a high price environment.
Rising costs will continue next year until extra capacity in 2023 offers solace
The intense disruption to the logistics and supply chain over the past year has pushed the cost of solar PV materials to new heights. In addition, the announcement of new power restrictions in mainland China in the second half of 2021 severely curtailed the production of manufacturers in certain provinces, impacting the production of key materials such as metallic silicon, polysilicon and solar glass, pushing prices further. increased.
From October 2020 to October 2021, the price of polysilicon has increased by more than 200%, alongside major price increases in other module materials such as solar glass and copper, forcing module manufacturers to increase their prices. IHS Markit estimates that since August 2021, the average production cost of modules has increased by more than 15% and module prices are now back at 2019 levels.
Other solar PV components such as inverters and trackers are also affected by the shortage of some materials (including semiconductor components) and the high cost of raw materials such as steel. IHS Markit expects the current high freight costs and resulting shipping delays to continue well into 2022, particularly impacting the economy of international projects.
“There is a great need in global markets to invest in and develop solar installations, but the supply chain is simply not ready to meet this demand and needs time to adapt. We have seen this most clearly in the polysilicon market, which will remain a bottleneck for solar PV growth in 2022 until planned new capacity is ramped up from 2023,” said Edurne Zoco, executive director of clean energy technology at IHS Markit. .
The ongoing tightness in the supply chain is expected to maintain high module prices through 2023. Costs will resume their downward trend from 2023 once polysilicon capacity increases with other nodes of the module supply chain and eases power restrictions in China for other key module materials such as polymers and solar glass. Increased module efficiency projected on module technology roadmaps i.e. passivated contact cells (TOPCon) or heterojunction (HJT) will also contribute to lower production costs ($/W) from 2023 onwards.
Policy uncertainty remains a factor
The joker for the 2022 forecast is the policy uncertainty in the three main solar PV markets – China, the United States and India – which are due to be resolved by the first quarter of 2022. These announcements will have a major impact on production capacity decisions and the pace of installation in the market. In China, for example, the length and intensity of current power restrictions will determine the solar PV utilization rate and the volume available to domestic and international markets. Future configuration of policy decisions and macroeconomic conditions could potentially undermine 20% of the utility-scale forecast in the United States next year due to a combination of high costs, a potential expansion of the ITC schedule and increasing hurdles to import modules from international markets. import.
“Despite the two-year stalemate in the cost reduction of solar PV, solar remains one of the energy technologies with the lowest capital expenditures and is the fastest energy source to install. More than 1,000 GWDC of new solar installations are expected to be installed through 2025, driven by the competitiveness, versatility and installation speed of solar technology, which will play a key role in decarbonising the energy system this decade,” said Edurne Zoco, Executive Director of clean energy technology at IHS Markit.
News item from IHS Markit