Despite utilities battling solar, the threat of international trade wars, and high-profile bankruptcies, the solar PV market continues to grow. Solar PV technology costs have decreased significantlyt, and pathways to further cost reduction are being pursued. By the end of this decade, solar PV is expected to be cost-competitive – even without subsidies – with retail electricity prices in a significant portion of the world.
According to a recent report from Navigant Research, annual installations of new solar PV capacity will more than double in terms of capacity by 2020, growing from 35.9GW in 2013 to 73.4 GW in 2020.
“Lower prices for solar PV modules are opening up new markets for distributed PV, while also helping the technology reach grid parity more quickly in high-cost retail electricity markets,” says Dexter Gauntlett, senior research analyst with Navigant Research. “The Asia Pacific region is expected to be the leading regional market for solar PV installations throughout the forecast period, led by China, where more than 100GW of solar PV will be deployed by 2020.”
As the industry matures, the market will evolve in several ways. While installation types vary by region, there is a general shift expected toward non-distributed PV systems (over 1MW) as a larger percentage of all solar PV installed capacity, according to the report. Distributed systems will account for less than half of all installations in 2014, and non-distributed systems will represent more than half of the market through 2020.
According to Navigant's report, there are three emerging trends that will shape the trajectory of the global solar PV market:
- Price drops: Module costs dropped from roughly $4 per watt in 2006 to below $1 per watt in 2012. Lower prices are opening up new markets for distributed PV while also helping the technology reach grid parity more quickly in high-cost retail electricity markets.
- Leasing programs: In distributed PV markets, new financing options are emerging that will make the technology available to more homeowners. Through solar leasing companies such as SolarCity and SunRun, homeowners can go solar with little to no upfront investment.
- Governments setting ambitious targets, reining in financial incentives: Like most energy technologies, solar PV is reliant on incentives from the government in some part of the value chain. As PV technologies have become more cost-effective, and amid a backdrop of government budget cuts, many governments are reining in popular feed-in tariffs (FITs) in leading markets. Germany, Italy, and China have all retooled their FITs, often placing greater emphasis on onsite generation, to prevent an overheated market. The industry is fully aware that lucrative financial incentives will not be around forever. As a result, many companies see 2017 (the year after solar PV investment tax credits expire in the U.S.) as the year that solar PV will be able to stand on its own without subsidies in most major markets.
Following years of solar PV module oversupply and unsustainable -- often artificially -- low pricing, 2013 is expected to be the year that the global solar PV market begins to stabilize. Navigant’s forecast is based on the assumption that PV module prices and installation costs will continue to decline at a much more conservative range of 3% to 8% per year from 2013 to 2020, compared to the drastic price declines in previous years. By 2020, solar PV systems will be installed in the range of $1.50 per watt to $2.19 per watt throughout the world. If this price range is realized, solar PV will largely be at grid parity, without subsidies, in all but the least expensive retail electricity markets.
Click here to purchase Navigant’s report, “Solar PV Market Forecasts.”