- IHS Markit analysts expect 2022 global PV deployments to add up to over 200 GW DC, representing more than 20% annual increase
- Distributed generation market of China will contribute heavily to this growth, along with other regions as the US, India and Europe among others
- High costs and freight disruptions are likely to continue in 2022, and some relief should come in with new manufacturing capacity in 2023
- Policy uncertainty may impact the realization of the forecast, especially in China and the US
Expect global solar PV installations in 2022 to grow to over 20% annually and exceed 200 GW DC milestone for the 1st time, despite 4% annual increase in PV system costs from 2020 to 2021, says market intelligence firm IHS Markit. And, expect this growth despite the high costs of freight and subsequent shipping delays that are very likely to continue into 2022.
Growth in both 2021 and 2022 will be led mainly by the largest markets as China, India, the US and Europe.
There is a caveat, of course, and that’s the policy uncertainty in major solar PV markets. For China, it relates to the length and intensity of current power restrictions that have been playing spoilsport for PV manufacturing activity in the world’s largest market for solar products. This would have direct correlation to solar PV production rates and export potential.
In the US, on the other hand, if high costs continue and the Investment Tax Credit (ITC) is not extended, it may strike off as much as 20% of new installations, warn the analysts.
As PV industry professionals know the talk of high prices relates not only to the PV raw materials due to tight supply, but also to the global logistics and supply chain disruptions that are hampering most industries. Polysilicon prices have gone up over 200% between October 2020 and October 2021, along with major price increase of materials as PV glass and copper. Thanks to this, average module production costs have gone up over 15%, thereby raising module prices to 2019 levels, they explain.
According to the IHS Markit, the current cost of a utility scale PV plant is between $0.55 per W DC and $0.97 per W DC.
Yet, there are positive signs everywhere for this robust industry. Beyond utility scale, it is the distributed generation segment, led by China, that’s bringing in a whole lot of capacity.
According to Research Manager, Clean Energy Technology at IHS Markit, Josefin Berg, strong growth of distributed generation comprising residential, and commercial & industrial segments is one of the success stories of solar PV in 2021, thanks to fuel crises and surging electricity prices, especially in Europe.
“There is significant appetite across global markets to invest in and develop solar installations, but the supply chain is just not ready to meet this level of demand; it needs time to adjust. We have seen this most clearly in the polysilicon market, which will continue to be a bottleneck for solar PV growth into 2022, until planned new capacity is ramped up from 2023 onwards,” said Executive Director, Clean Energy Technology at IHS Markit, Edurne Zoco.
Cost decline for PV technology, as witnessed through the years, will continue once more capacity starts to come online in 2023, along with increased efficiency due to emergence of new technology as passivated contact cells and heterojunction (HJT).
Zoco added, “Over 1,000 GW DC of new solar installations are expected to be installed (globally) through 2025, driven by solar technology competitiveness, versatility, and installation speed, that will be instrumental to contribute to the decarbonization of the power system this decade.”
Interestingly, IHS did not provide any updates for 2021 in this release. In March 2021, IHS Markit forecast 2021 global PV installations to grow to 181 GW, increasing it from 158 GW it guided for earlier, notwithstanding increased module prices, long lead times and rising freight costs (see IHS Markit Revises 2021 Solar PV Forecast To 181 GW). However, the 181 GW 2021 forecast seems high today, when taking into consideration the strong material and module price increases over the course of the year and multiple companies delaying project installations into 2022. However, SolarPower Europe in its July published Global Market Outlook had forecasted 163 GW additions in 2021 and 203 GW for 2022 (see SPE: 163 GW Solar PV Capacity Addition Globally In 2021)
