Strong policy environment in China and the European Union (EU) will encourage faster deployment of utility scale solar power projects leading to the commissioning of 190 GW new solar in 2022, and reach almost 200 GW in 2023, according to the International Energy Agency (IEA).
Renewables capacity in 2022 will grow over 8% on annual basis, exceeding the 300 GW milestone (320 GW to be precise) for the 1st time with 60% of it coming from solar PV technology and another 80 GW from onshore wind, says the IEA in its Renewable Energy Market Update Outlook for 2022 and 2023. In 2021, global renewable energy additions were a total of 295 GW.
China is likely to account for 45% of global renewable capacity additions in 2022-2023 with the commissioning of over 140 GW on average per year. Europe, on the other hand, driven by its need for energy security, is seeing a greater and faster move towards policy certainty for solar PV and renewables in general. Utility scale installations will be ably supported by rooftop solar to expand the share of this technology.
Currently, EU sources between 100 TWh to 200 TWh of natural gas-based electricity from Russia, and the IEA believes incremental growth of up to 180 TWh renewable electricity between 2021 and 2023 will be almost equal to the highest value of Russian imports.
"With current deployment trends, wind and solar PV expansion in the European Union has the potential to reduce the dependence on Russian gas use in electricity significantly," states the IEA.
Installations for both solar PV and wind energy could be higher if it was not for supply chain and logistics challenges. Analysts expect costs for solar PV and wind energy to remain elevated with high commodity prices as those for PV-grade polysilicon, steel, copper and aluminium, and increase in freight prices. Overall investment costs for new utility scale PV and onshore wind plants are likely to go up 15% to 25% in 2022.
"Surging freight costs are the biggest contributor to overall price increases for onshore wind. For solar PV, the impact is more evenly divided among elevated prices for freight, polysilicon and metals," reads the report.
Yet this has not dented the competitiveness of renewables as the push comes from skyrocketing prices of fossil fuel generated electricity, especially in the European Union (EU).
"However, even the highest-priced onshore wind and utility scale contracts signed over the last five years are half of the average wholesale prices seen today in the European Union. For newly contracted projects, despite cost increases, onshore wind and solar PV ventures are offering long-term contracts significantly lower than wholesale price averages over the last six months," points out the report.
Report writers further explain, "For instance, prices for utility scale solar PV and onshore wind projects increased 15-25% in the recent Spanish auction held in December 2021, to $37 per MWh and $35 per MWh, respectively. Today, these results are one-tenth of average Spanish wholesale electricity prices over the last 14 months."
The report doesn't offer any specific forecast for the next year, but cautions that unless new and stronger policies are implemented in 2023, global renewable capacity additions are expected to remain stable compared with 2022.
Complete IEA report can be downloaded for free from its website.
Recently released at the Intersolar Europe 2022, SolarPower Europe's (SPE) flagship report Global Market Outlook for Solar Power 2022-2026 pegs annual solar PV installations in 2022 as 228.5 GW in medium scenario, but in the high scenario the expectation is for 270.8 GW of additions (see Global Cumulative PV Capacity Exceeds 1 TW).
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