TaiyangNews Global Solar Market Developments Special Webinar

The global solar PV market is on a growth trajectory, as installation capacity went up by around 90% annually in 2023. Both the leading solar shows of the world, SNEC 2024 and The smarter E/Intersolar Europe in Munich, were all sold out, pointing to the growing number of players in this domain.  

However, in the post-COVID era, the industry has witnessed a massive increase in production capacity, which has now led to a mismatch in demand and supply. This overcapacity has crushed the prices of PV products. This is hurting the margins of PV manufacturers, leading several of them to resort to lower capacity utilization. 

With prices for silicon to modules having decreased further in the first 6 months of the year, as shown in the TaiyangNews Price Index, many leading PV companies reported net losses in Q1, as TaiyangNews managing director Michael Schmela showed in the introduction of our Special Webinar on Global Solar Market Developments: H1 Review & H2 Outlook to Discuss Solar Supply, Demand & Prices on July 18, 2024, for which we brought together solar industry’s market research and policy experts. 

In his presentation on the Global Solar Market Developments, Rystad Energy’s VP, Renewables & Power, Fabian Skarboe Rønningen said he expects the global cumulative solar installations to surpass 20% of installed capacity by next year. 

While 2024 is likely to be another record year for solar PV installations with an estimated 481 GW DC in its most likely scenario, Rønningen believes it won’t be as spectacular as last year with an annual growth of only around 9%. He expects the market to grow at an average rate of 7% by 2030. As for segments, utility-scale will lead with 282 GW DC in 2024, while commercial and industrial (C&I) will add 108 GW DC, and residential PV 90 GW. The only segment to see a degrowth is residential, mainly due to the expected drop in 2 key markets—Europe and the US.  

Regionally, the market is led by Asia Pacific, mainly China. The Asian giant is forecast to exit 2024 with a capacity of 277 GW DC, and grow to 307 GW DC in 2025, after having grown by 260 GW DC in 2023. It will be followed by EMEA and the Americas.  

Looking ahead, the global power generation mix shows that solar PV still represents around 6% of global power generation in 2023, but is growing the fastest compared to other renewable sources and is expected to reach 10% already in 2026.

Reflecting on the demand and supply mismatch, Rønningen pointed out that even if one considers 500 GW DC or more of demand this year, it will depend now on how good H2/2024 goes. Nonetheless, there is already more than 1,000 GW of manufacturing capacity globally with all the major solar PV manufacturers. Yet the global manufacturing capacity currently being used is less than 40%. 

New capacity, across the value chain, is also increasingly planned in markets outside of China, but in any case, mainland China will continue to dominate the world’s solar supply by far. 

This may result in increased consolidation among the Chinese players, and low utilization factors which Rønningen cautions could eventually lead to existing facilities being suspended or shut down altogether. Upcoming capacity may also be canceled if this mismatch persists.  

Even in this situation, according to Rystad’s analysis, the oversupply situation is likely to persist, especially over this year and the next. 

Talking about the regional spread of the manufacturing capacity, while Europe could meet its domestic demand with locally-produced solar panels soon, according to Rystad, it will lag behind the other steps of PV production. However, conference attendants challenged Rystad’s 60 GW module capacity number for 2027, which would be twice the target of the European Solar Industry Alliance by 2030. Rønningen said this is based on all announcements being realized. In any case, the EU will continue to remain dependent on imports, in particular for more upstream products, mostly from China. 

With much more government support, production capacities will be much higher in the US with that for modules reaching around 110 GW by 2025, and India, where panel capacity is expected to reach around 140 GW. In particular, India’s supply is expected to be higher than demand from wafers to modules in 2026. 

Mixing Flexibility Leads to Increasing Curtailment, Decreasing Solar Capture Rates 

The one direct impact of today’s PV product oversupply is on prices, which have been tumbling down. This makes solar super-competitive, and price elasticity is seen with solar becoming increasingly popular around the world.  

Even though it is good to be on the buyer’s side when it comes to PV products, life’s increasingly difficult for developers and IPPs. Rønningen showed the global average PV power plant’s capacity factor having decreased last year after increasing steadily over the past decades. 

In Europe, the value of solar power, the so-called solar capture rate, was down to 60% in many big markets. 

He also pointed to the rising challenge of solar energy curtailment in China. Over the last 2 years, it has grown mostly in the western provinces where the big PV power plants have been built. In Tibet, the curtailment rate even reached 31% in March, up from 3.9% one year earlier. Though an outlier, Gansu and Qinghai saw over 9% curtailment rates in March this year, clearly showing that grids and other flexibility technologies are far behind solar’s rapid growth.   

The Policy and Projects Director at Global Solar Council, Abdallah Alshamali trained his lens on the world’s largest solar PV market, China, as he delved into the policy challenges and opportunities for the global market. 

The Global Solar Council contributed a focus article on China for the recent Global Market Outlook 2024, published by SolarPower Europe with support from GSC. China surprised the world when it installed more than 216 GW AC (263 GW DC) out of 447 GW DC new solar PV capacity in 2023, building out its market-leading position to nearly 60% compared to the rest of the world. Non-fossil fuel energy now accounts for more than 50% of the country’s total electricity generation capacity. It is going to grow as the country chases its carbon neutrality goal by 2060.  

Alshamali listed the various enabling solar PV policies responsible for this growth in China over the years that have boosted installations in both utility-scale as well as distributed solar in the country. Some of the most transformational policies were related to the feed-in-tariff (FIT) and its inclusion in the 5-year plans, according to him.     

At the end of 2023, 20 Chinese provinces had a cumulative installed capacity of over 10 GW, and 16 provinces more than 20 GW.  

Solar Barriers 

Alshamali listed the barriers solar faces from here on, like supply chain issues, regulatory hurdles, the environmental impact of solar PV technology, grid integration and curtailment, financing and investment risks, land availability, trade disputes and tariffs, among others. These barriers are not only applicable to China but globally, as listed in detail in the Policy Recommendation of the Global Market Outlook for Solar 2024. 

Yet, there continues to be a tremendous amount of scope for the Chinese solar PV market to expand. Alshamali believes this exists in technological advancements and efficiency improvement, continued support of government policies and targets, green hydrogen projects, demand-side solutions, market-based mechanisms, and the like.  

Having clear, ambitious, and binding targets for large-scale solar development in markets with untapped potential will lead to overall global solar PV development that’s not concentrated in a few locations alone. 

Such a stable policy environment will attract private investment, which is crucial for emerging markets and developing economies, he pointed out.  

To achieve a tripling of the renewable energy target to a cumulative 11.2 TW by 2030 as agreed at COP28, the world will need to invest $12 trillion, according to the GSC. It can be achieved through various financial measures, including blending financing, incentives, tax credits, supporting multilateral and bilateral development institutions, and collaborating with major private investors especially targeting smaller projects, contracts, PPAs, and ESG Considerations.  

One of the main challenges is the grid, hence a need to unleash the flexibility revolution by scaling up investment in battery storage, grids and electrification. Streamlining permitting procedures and adopting sustainable ESG practices, including recycling of solar components, will also go a long way, according to Alshamali. 

Panel discussion 

In a session moderated by TaiyangNews’ Michael Schmela, the panelists discussed growth & consolidation in the global solar PV market, and navigating through the rough solar waters.  

Responding to Schmela’s query on a conservative forecast for global solar installations in 2024 even as other industry voices anticipate more than 500 GW deployments this year, Fabian Skarboe Rønningen of Rystad Energy said their research focuses on under-construction utility-scale projects. While he’s aware of the competition and that some even predict over 600 GW of deployments, they have a bottom-up approach.  

To curb their losses, some of the Chinese manufacturers may want to shut down their factories. However, Rønningen said the companies may be under pressure from the regional governments in China that have provided land and other amenities to these manufacturers—to continue operations.  

In such a scenario, Rønningen opined, the narrative of survival of the biggest and largest solar companies in today’s scenario may just turn true.   

As for prices, he said these will continue to stay low this year and the next as well.  

He suggested that the stakeholders should look at bringing down the price of storage and ensure grid bottlenecks are resolved. Flexibility is key for further strong growth. 

Global Solar Council’s Abdallah Alshamali stressed the urgent need to diversify global solar PV development to regions like Sub-Saharan Africa where this clean and affordable technology can truly make a difference.  

According to Alshamali, it is important to bust the ‘inflated perceived risks’ for investing in Sub-Saharan Africa. It is crucial to bring in the much-needed financing to bring in green guarantees for projects. It will also incentivize new markets while mitigating risks to serve demand.  

The focus at COP29 will be on financing, he shared. GSC, too, plans to start a finance working group to discuss ways to bridge the gap between different stakeholders.  

The general populace must be fed the right information about solar PV by tackling misconceptions to increase its acceptability. It will be good to have more deployments of plug-in solar and solar balconies. When people see the benefits themselves, local governments will be open to offer speedy permits to such projects. 

Abdallah also batted for a global 100% renewable energy target for 2050 or 2070, so that the world stops working on incremental changes, and rather looks at the long-term and sustainable change to the world’s energy transition.   

TaiyangNews invites all its readers to register for our next event, the Global PV System Technology Trends H1/2024 Conference where we will take a look into the latest products and technology trends shown at SNEC and The smarter E/Intersolar Europe this year.  

Moreover, after covering both these events, TaiyangNews will now head to the largest clean energy event in North America, RE+. At the event on September 9, 2024, TaiyangNews, along with EUPD Research and RE+, will host a 1-day physical conference on How to Manufacture Solar Wafers, Cells and Modules Competitively in the United States. If you are at RE+, do join us at the Anaheim Convention Center in California—register here.