Global solar and energy storage trends

Solar and energy storage take top billing in IHS Markit's latest Cleantech Trends 2022 report. In particular, distributed generation (DG) - which the research firm defines as PV systems under 5 MW - reached an expected growth rate of 20 per cent in 2022.

This segment continues to show strong resilience in the current challenging high-cost market environment, the firm said. Many utility-scale projects have been delayed or cancelled over the past two years, but distributed generation is still expected to see strong growth.

IHS Markit said, "This difference reflects both favourable distributed generation policies across markets and concerns about high electricity prices and climate footprints for many consumers."

Around 60 per cent of this distributed generation scale originated in China and Germany - two countries that are pursuing strong policies to make distributed generation a central part of their renewable energy targets. Another high-profile market for distributed generation is Brazil, where net-metered solar systems installed through 2023 will continue to be exempt from grid fees. Conversely, this market segment in the US is likely to shrink significantly this year as multi-state markets move away from net metering tariffs.

IHS Markit says: "Even with higher levels of capital expenditure, distributed generation systems can still compete with retail electricity prices in many markets, meaning that the distributed generation segment is less price sensitive than utility-scale PV."

Rising capital expenditure

Capital expenditure is higher than expected in 2022, but a new growth paradigm has emerged for renewables. Worldwide, renewables are already the cheapest new energy source, and cost reductions triggered by technological changes and policy drivers will further boost capacity and lower prices.

Solar investors expect capital expenditure to continue to fall, but the rate of decline will slow as the technology matures. This, combined with supply chain disruptions and rising shipping and material costs, will combine to lead to higher than expected capex for solar projects in 2022.

As renewable energy penetration increases, the competition is less about cost and more about the value that can be delivered to the system, and IHS Markit says: "The predictability of renewable energy developments is quite valued during periods of high market volatility."

Investors are also looking at renewable energy investments as a way to deliver on climate commitments and reduce risky portfolios, and IHS Markit says that the consolidation of renewable energy banks and the strong development of green finance has reduced the cost of capital for renewable energy projects. Recent volatility and spikes in electricity prices have also increased the price of renewable energy capture.

IHS Markit said, "Such perceived value has offset higher-than-expected capital expenditure in the industry and supported continued expansion of renewable energy capacity."

Supply chain woes, trade barriers and geopolitics continue to drive PV manufacturing capacity closer to end users. iHS Markit said that supply chain tightening is likely to continue for some time, but there have been some positive changes so far.

The level of polysilicon capacity additions has been more positive than expected.

New entrants in the wafer segment will add capacity and improve price competitiveness.

Chinese PV manufacturing is no longer constrained by energy intensity and energy power.

In 2023, India, the US, Europe and South East Asia will continue to announce new ingot, wafer, cell and module capacity as the supply chain grows and adapts to the new international trade environment.