Global Annual Solar Installations Expected to Generate More than $259 Billion by 2027
October 25, 2018 -- A new report from Navigant Research analyzes the global market for distributed and non-distributed solar photovoltaics (PV), providing forecasts broken out by country, region, and segment, through 2027.
According to the report, annual global SPV capacity additions increased from around 74.5 GW in 2016 to 98.4 GW in 2017. The global SPV market in 2017 generated $141.6 billion in 2017, about $59.3 billion of which came from distributed installations. The global blended average price for solar installations increased slightly from $1.89/W in 2016 to $1.95/W in 2017.
Asia Pacific and—to a lesser extent—North America continue to shape the global SPV markets. China installed a world-leading 53.1 GW of SPV in 2017—more than half of global capacity additions—including 23.8 GW of distributed solar. Though growth is expected to slow in 2018, national support for solar remains strong in China. North America had a slower year, with the US installing only 11.8 GW (including 5.6 GW of distributed capacity).
Key Trends in the SPV Market
The global electric power industry is evolving from a model that relies on large centralized power plants owned by utilities to one that is more diverse in sources of generation and ownership of generation assets. Regulatory and legislative structures are evolving away from structures that incentivize widespread solar deployment to more nuanced mechanisms that enable solar growth to be controlled and directed.
These mechanisms aim to avoid negative outcomes at the system level as renewable penetration increases. They also aim to ensure that resources are allocated to new generation projects as efficiently as possible in a competitive, technology-agnostic manner. The following are two trends shaping current solar markets and the forecast outlook:
• Price drops continue: Crystalline module costs dropped from roughly $4.00/W in 2006 to a global average of $0.41/W in 2017. In 2017, auctions in Saudi Arabia saw bids for utility-scale solar capacity at $0.023/kWh. Prices below $0.05/kWh are commonplace in developed markets. Lower prices open new markets for SPV and accelerate solar toward grid parity in high cost retail electricity markets.
• Solar auctions begin to replace FITs: The success of SPV in recent years has forced governments at the state and national levels to reevaluate their support for solar. Feed-in tariffs (FITs) have been largely curtailed or replaced by reverse auction systems. Emerging and leading markets are financing gigawatts of SPV projects, and numbers are expected to grow over the next decade. However, completion rates for auctioned projects are not yet known.
SPV Market Forecast
An estimated 1,507.6 GW of SPV is expected to be installed between 2018 and 2027, generating $259.3 billion in revenue for the industry globally. DSPV is expected to account for about 911.5 GW, or just over 60% of overall capacity additions. Utility-scale installs will make up the remaining 596.0 GW.
China and the US continue to shape the global SPV market, though the overall market is expanding as smaller countries with high irradiance develop new capacity and low prices attract new countries. Following this trend, DSPV markets in Latin America and the Middle East are emerging with successful, competitive auctions and strong project pipelines.
Navigant Research’s forecast assumes that PV module prices will fall to a global average in the range of $1.11/W installed anywhere in the world by 2027. If realized, SPV will largely be at grid parity without subsidies in all but the least expensive retail electricity markets. At the same time, financial incentives such as FITs and Investment Tax Credits (ITCs) are expected to be reduced significantly during the forecast period or abandoned altogether in favor of reverse auctions and solar tenders.
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