IHS Markit’s Top 10 Clean Energy Trends

The global solar PV industry’s distributed generation (DG) segment is likely to grow by 20% in 2022, and more than 60% of its YoY growth will come from Mainland China and Germany as the 2 countries make this segment a key part of their renewable targets, according to IHS Markit.

Growth in DG systems, which cover installations below 5 MW DC capacity, are one of the trends highlighted in IHS Markit’s whitepaper on 10 Cleantech Trends in 2022.

Yet another strong DG market in 2022 will be Brazil where net metered solar systems are exempted from paying grid charges through 2023, leading to a consistent high performing segment. Growth will also be witnessed in already strong markets of the US and France, among other growing regions. IHS Markit believes concerns about high electricity prices will fuel further demand for solar PV ‘particularly in locations where little PV has been installed to date’.

Governments too are supporting rooftop solar through supportive policies. India, for example, has recently simplified the process of installing rooftop solar (see India PV News Snippets).

Going forward, IHS Markit sees this market segment to grow with supportive policies and accompanying battery solutions.

Ease of supply chain related challenges

For solar PV, the analysts also see the supply chain challenges experienced in 2021 to continue in 2022, especially in H1/2022. Yet some relief can be expected with new polysilicon capacity coming into the market ahead of schedule and ‘aggressive decrease of conversion rates’ from wafer players for gram per W. There will also be new wafer players in the market, easing the situation further and bringing down costs.

As China is the world’s largest supplier of solar PV products, the government exempting renewable energy supply chain from its list of activities facing power restrictions will also be helpful to get products faster into the market.

PV manufacturing to move closer to end markets

IHS Markit also expects solar manufacturing expanding beyond China to newer geographies due to geopolitics, trade barriers and supply chain issues, as governments step up efforts to bring down their reliance on Chinese products. These factors will ‘drive new solar PV manufacturing capacity closer to end markets’ (see Another Solar Tariff Petition In US).

In a post-COVID world, the global solar PV manufacturing will continue to be dominated by China, but its direct production share is likely to reduce as various geopolitical issues force manufacturers to diversify their production locations. (Source: IHS Markit)

Even Chinese manufacturers will face pressure to build new capacity outside of Mainland China to access international markets of the US and India, among others. This trend would be a next step of a trend seen before, when Chinese companies moved to Malaysia and Vietnam to address anti-dumping measures from Europe and the US.

Renewables grow despite higher capex

Over the period the world dealt with temporary challenges as COVID-19, and ensuing supply chain issues, renewables continued to grow with huge investments flowing in and unceasing technological improvements. This has contributed to lower capex for solar PV among other renewable technologies. Now it is more about the value that renewable energy brings rather than the capex it incurs.

Hence, their growth is likely to continue, however the industry needs to mitigate and hedge risks related to supply chain challenges and increasing costs to ensure healthy growth of renewables.

Corporate RE uptake to get stronger

Protecting share price and business by improving their environmental, social and governance (ESG) credentials through investing in renewables will continue to inspire corporate adoption of clean energy technologies in 2022. They are likely to step-up their renewable commitments to offset carbon emissions to avoid penalties down the line, lower their day-to-day electricity costs and de-risk their business from the current energy market volatility.

“The growing trend among off-takers will be to try to fulfil their energy requirements with 24/7 renewable energy supply. This will increasingly require developers and renewable asset owners to build hybrid power plants (for example, mix of solar, wind and/or energy storage) that are located close to customer load centers to fulfil their energy needs,” according to the whitepaper.

In 2021, Bloomberg New Energy Finance counted 31.1 GW of new renewables capacity contracted by corporates, growing close to 24% annually (see Over 31 GW Corporate Clean Energy PPAs In 2021).

Green hydrogen growth with policy clarity

In 2019, less than 15 GW of electrolysis projects were proposed, growing to 70 GW in 2020 and almost 250 GW in 2021, globally. The year 2022 may turn out to be the tipping point for green hydrogen, triggered by upcoming policy quotas. For instance, there is growing policy certainty in Europe through the proposed Renewable Energy Directive (RED) II. By 2030 there could be development of up to 250 GW of solar PV, 100 GW of onshore wind or 70 GW of offshore wind either in the EU or internationally if the block decides to import green hydrogen.

Australia too has its own hydrogen policy and soon one is expected for India as well, all of which will need more renewable energy capacity. The whitepaper points out that if green hydrogen projects currently in the pipeline do come true as scheduled, ‘a significant supply gap could open up in 2025’.

The whitepaper that also touches upon wind energy, lithium-ion batteries, and other topics can be downloaded for free on IHS Markit’s website.