Wood Mackenzie: ‘Only’ 103 GW PV In 2019

Ultra-Low Record Tariffs, Increase In Corporate Solar Power Procurement In US, PV Project Trading, Boost For Solar+Storage Power Plants Are Some Trends To Watch Out In 2019, Says Wood Mackenzie
05:21 AM (Beijing Time) - 25. January 2019
2019 Solar installation forecast

Key Takeaways

  • Wood Mackenzie’s top 10 list of solar power market trends to watch out in 2019 sees the year adding 103 GW of new capacity
  • PV power prices can fall as low as $14 per MWh as several big tenders are scheduled to take place in 2019
  • UK will join the subsidy-free club of solar power projects along with Spain, Portugal and Italy
  • Corporate procurement will see an increase in the US as companies scramble to sign agreements before interest rates rise and the 30% investment tax credit (ITC) comes to an end
  • Oil and gas majors will see relevance in adopting solar PV for their upstream and power segments, as well as for their emission reduction policies, among other trends

Even as Wood Mackenzie sees 2019 solar developments a positive light with policy clarity in China and Saudi Arabia, aggressive solar+storage pricing in Hawaii and India’s announcement for single site PV projects, the market research firm forecasts global solar demand to reach ‘only’ 103 GW of total capacity, in its report Global Solar PV Markets Top 10 Trends to Watch in 2019.

While it said this would be the first time the world will be able to breach the 100 GW mark, according to most estimates from other solar analysts this already happened in 2018. In fact, Wood Mackenzie’s numbers are the most conservative among leading solar forecasters that recently published 2019 installations to range between 111 GW (TrendForce) and between 125 and 141 GW (Bloomberg NEF). After 2020, Wood Mackenzie says market will pick up pace and settle at 115 GW to 120 GW through 2023. Quarterly installations will break the 30 GW level for the first time in Q4/2019.

Wood Mackenzie sees the top 20 largest solar markets to account for 83% of new global demand to 2023, with Saudi Arabia, Iran, Egypt and Italy expected to be the fastest growing markets. China’s dominance will remain, but its share will fall from 55% in 2017 to 19% in 2023.

Beyond solar market growth, it sees other trends, such as:

Ultra-low tariffs, as low as $14 per MWh, can be expected in H1/2019 since some big tenders are scheduled to be held then, including in Mexico and Saudi Arabia.

Another trend the report sees emerging in 2019 is the addition of the  UK to the subsidy-free club of Europe, along with Spain, Portugal and Italy. In the UK, there are 2.3 GW of projects in the development pipeline that could be delivered sans subsidy. The trend will grow as most project developers will be looking at signing PPAs with corporate offtakers with attractive PV costs averaging around £40 ($51) per MWh. Over the next few years, more European nations are likely to join the club.

Big businesses will opt for corporate procurement in the US, a trend that will grow in 2019 before the expected interest rates rise and the 30% investment tax credit (ITC) comes to an end.

In 2018, there was a 38% increase in solar power projects exchanging hands, amounting to 21 GW in total, with the biggest deal being Global Infrastructure Partners acquiring SunPower’s 4.7 GW utility-scale pipeline in the US (see Clearway Acquires SunPower’s 4.7 GW PV Pipeline). As solar starts to be seen as an asset class, there is easy availability of finance which will spur more solar projects trading hands, especially in the US. Among other markets where this trend will be seen are India, and some Southeast Asian markets.

Solar-plus-storage projects will grow in popularity, particularly in island power markets in Southeast Asia, South Pacific and the western US, driven by falling prices and regulatory push. The report points out the 262 MW of solar and more than 1 GWh of storage in Hawaii could be realized with prices as low as $78 per MWh (see HECO Planning 262 MW Solar+Storage Projects).

Technology wise, mono PERC and bifacial module technology will make a difference to bringing down CAPEX costs in 2019. This year, the authors of the report expect 41% of global module manufacturing capacity to produce mono PERC, increasing from 36% in 2018, while more bifacial module projects will be seen especially in desert environments. “By the end of 2019, as global blended module prices fall below $0.25/Wdc, global average CAPEX will fall to US $0.95/Wdc – this is skewed by high-cost projects in Japan, however, and most countries in Asia will see average CAPEX fall below US $0.80/Wdc,” reads the report.

More than 63 GW of single-developer mega project capacity is in the global pipeline according to Wood mackenzie’s Global Utility-Scale PV Project Tracker, of which 84% is in pre-construction phase. The report explains, although these project announcements could drastically alter the trajectory of the global market in 2019, fewer than 10 GW of mega projects are operational globally, half of which are in China. Many of the in-development projects are concentrated in India, China, the Middle East (Oman, Kuwait, Iran, UAE), and Australia. This huge capacity means 2019 could be a make or break year for mega project plans.

It will be an era of transition for deep-pocketed well versed oil and gas giants that will opt for solar in upstream and power segments.  The clean energy technology can also complement the oil, gas and metal extraction industry as it would reduce the need to burn more oil and gas on site saving the same to be sold at international market prices. Such companies are also looking at solar PV among other renewables to reduce their emissions.

Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

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Anu Bhambhani