Emerging solar markets will come of age in the 2020 as international locations from Saudi Arabia to Pakistan to Malaysia be part of the “gigawatt club.”
Outside of the OECD, there are actually auctions deliberate in 44 international locations, and a solar project pipeline of 180 gigawatts in virtually 120 international locations, according to Wood Mackenzie.
However, new markets will deliver new sorts of challenges for solar. These embrace the danger of weak offtaker funds main to power buy settlement renegotiations (as in South Africa and India) and rock-bottom public sale costs (principally in Gulf Cooperation Council international locations) setting unrealistically low worth expectations from governments in tougher markets.
Reflecting on the 2010s
In the 2010s, solar defied expectations. Cumulative international solar installations have now surpassed 600 gigawatts, from round 20 gigawatts on the finish of 2009.
At the start of the final decade, Germany accounted for 52 % of international solar installations and was the one nation to set up multiple gigawatt of solar yearly. Fast ahead to 2019: 16 international locations throughout all main areas put in greater than a gigawatt of solar final 12 months.
It was additionally the last decade that noticed China change into the dominant drive in PV, each up- and downstream. In 2009, China accounted for 2 % of international installations. Just eight years later, it claimed greater than half of the market.
Solar’s success in the 2010s resulted in a boom-and-bust cycle in many markets as governments launched subsidy applications simply as solar prices dipped, which triggered markets to surge briefly earlier than the subsidy applications had been taken away.
The increase and bust of that interval has largely come to an finish, with the latter years of the last decade seeing a complete shift away from Feed-in Tariffs (FITs) in the direction of aggressive auctions. These supplied coverage makers a more practical software to management deployment charges, and a means to procure more and more low-cost power.
Costs will proceed to fall in the brand new decade, although extra slowly than earlier than as business focus shifts away from capex and onto levelized prices.
As the brand new decade begins, solar PV tasks in some markets are actually being developed with none type of authorities assist, which is indicative of the progress the business has made during the last ten years.
New purposes for a brand new decade
The extractive sector will current a possibility for solar in the 2020s. Social considerations and the excessive price of oil-based power is main to corporations in extractive industries corresponding to mining to look to PV-based techniques as a cleaner — and in many instances cheaper — various.
Hybrid solar PV techniques will change into the answer of selection for an rising quantity of purposes. Pairing PV with ever-cheaper batteries can supply agency zero-carbon power; pairing with present fossil gas mills can cut back the carbon depth of power provide.
Floating solar and the like is poised to speed up as nicely. ‘Floatovoltaics’ and ‘agrivoltaics’ will enable buyers in solar PV to compete for a wider array of alternatives than ever earlier than.
Lastly, off-grid solar presents a serious alternative. Off-grid solar PV-based installations for these presently with out power provide, or the place the service from present suppliers is insufficient, will deliver solar to locations it hasn’t been viable earlier than.
While the approaching decade undoubtedly seems to be rosy for solar PV, actions by policymakers might pave the best way for even stronger progress.
New corporations are lining up to enter the grid-connected solar market. The pipeline of growth tasks is rising by the day and there’s a lot of low-cost finance accessible. But a scarcity of funding in grid infrastructure can maintain buyers again.
Decades of under-investment in grids and burdensome connection processes are placing the brakes on markets around the globe. To notice the degrees of funding in solar PV, wind and energy storage wanted to decarbonize power markets, policymakers will want to prioritize the build-out of each transmission and distribution networks.
Finally, economy-wide internet zero emissions targets can be on the agenda on the UNFCCC’s 26th Conference of Parties (COP) held in the UK later this 12 months. A constructive final result from the talks would lead to extra motion from monetary establishments and buyers to redirect capital in the direction of zero-carbon energy.
In flip, some of the world’s largest energy corporations, which have to this point — at greatest — begun to dabble in solar PV markets, could double-down on their commitments. This may very well be transformative for the sector.
Tom Heggary is a senior solar analysts at Wood Mackenzie. His analysis perception on solar traits in the 2020s is avaialble without cost here.