Soon after SNEC Shanghai and Intersolar Munich, prices for solar products have considerably dropped after the solar industry underwent a significant period of high prices impacting demand in some markets. Large amounts of new polysilicon, wafer, cell and module capacities are on their way to being built, anticipating growing demand. Yet, solar energy is now up against falling electricity prices from conventional sources as the markets are not expecting to be hit by another energy crisis in the near future.
To discuss how the global solar market is likely to pan out in terms of demand, supply and prices, TaiyangNews brought together leading consultancies, solar market research firms, and stakeholders in the supply chain for our Webinar on Solar Market Overview 2023 Looking Back & Forth On Global Solar Supply, Demand & Prices on July 25, 2023.
Calling the global solar installations growth story, a steady one, Wood Mackenzie Principal Analyst for Distributed Solar in Europe Juan Monge said China and the US alone are expected to build more than 900 GW of utility scale PV through 2032.
The US based market intelligence firm forecasts a record global solar PV buildout this year with nearly 270 GW DC capacity under base case scenario. A decade down the line, by 2032, annual additions are likely to rise further to 330 GW DC as levelized cost of electricity (LCOE) further falls, policy support picks up pace, coal power plants retire, and further electrification takes place. However, the forecast is much more conservative than those of most other analysts, like SolarPower Europe, which is seeing around 341 GW to be installed in 2023.
For Europe, Wood Mackenzie's solar installation forecast is the addition of more than 530 GW DC of new capacity between 2023 and 2032, reaching a total of nearly 800 GW DC cumulatively.
In Europe it is the updated revisions to the National Energy and Climate Plans (NECP), mandatory installation of rooftop solar for residential and commercial segments under REPowerEU, growing list of corporate power purchase agreements (PPA), and LCOE that Wood Mackenzie counts as the primary reasons for the growth spurt.
These measures will positively impact all PV segments, especially distributed PV generation to which Germany, France and the Netherlands are likely to be the top contributors over the next decade. In Q1/2023, it was the UK that saw the 'best results' for quarterly residential PV installations over the last 7 years, thanks mainly to contract backlog from the last year.
Wood Mackenzie expects the residential PV installed capacity for the UK to grow by a minimum of 60% in 2023.
While the future is bright, Monge also listed the challenges that hinder the growth of European solar market including inflationary pressures and interest rate hikes. "Fixing supply chain risks, grid constraints and permitting bottlenecks will be key to securing a solar-dominated energy future for Europe," he stated.
Nonetheless, even as the Inflation Reduction Act (IRA) and EU Net Zero Industry Act are starting to shift the demand and supply landscape with their boost to local manufacturing, Monge stressed that over the next 5 years the solar supply chain will continue to be dominated by China, mainly because of competitive costs.
From Gessey PV Consulting's Consulting Department, Jessica Yang shared numbers that show continued dependence of Europe on Chinese modules. Of nearly 99 GW solar modules China exported in H1/2023, 57% have landed in Europe.
Yet China's domestic demand for solar modules remains unsatiated as the country saw a 28.37% annual jump in module procurement bids in H1/2023 with a total of 170.43 GW. For 2023, Yang guides for annual solar installations in China to grow to between 140 GW to 160 GW, which is on a higher side than the recently revised CPIA guidance of 120 GW to 140 GW (see CPIA Raises Solar Installation Forecast For 2023).
In terms of technology, the market is seeing a faster move towards TOPCon whose total production capacity from tier I producers is likely to grow to 456.5 GW, while Gessey estimates TOPCon module production capacity this year to add up to around 100 GW.
Reflecting on the current pricing environment along the solar supply chain, Yang said for polysilicon, wafer, cell and modules there has been price adjustment since the beginning of the year. In H2/2023, she anticipates price of silicon materials to stabilize at the bottom with increase in demand, but later part of the year might see some price volatility.
"The trend is for volume to rise and price to stabilize," added Yang. TaiyangNews is now publishing a PV Price Index based on Gessey data on a weekly basis (see TaiyangNews Price Index).
Presenting the industry perspective on the recent trend of standardization, Trina Solar's Product Manager Lukas Ye discussed the rationale behind some of the largest Chinese module manufacturers agreeing to the standard size of rectangular silicon wafer panels (see Standardized PV Panel Size Gets Unanimous Votes).
Ye explained that since the ultimate aim is for PV LCOE to come down to accelerate global energy transition, it makes sense for the industry to agree on standardization to accelerate solar installations and make them easier to install. This helps solve supply chain difficulties in the industrial chain and also avoid wastage of materials.
Trina follows the 2,382mm x 1,134mm standardized size for its i-TOPCon advanced modules that's available for both utility scale, and commercial and industrial (C&I) segments, calling it the golden size.
Ye also shared the company's sustainability practices that he says eventually benefits the environment, industry and the company in the larger picture, as part of its corporate social responsibility (CSR) initiatives.
While the Chinese manufacturer conducts its own internal CSR due diligence covering supply chain management, quality management, corporate governance, among other topics, It also gets independent 3rd party audit done.
As part of its sustainability initiatives, the company aims to reduce its GHG emission/MW module by 50% by 2025, from 2020. By the same timeline, it targets to bring down the integrated energy consumption for per MW of solar PV products by 40%. By 2030, Trina targets to become 100% renewable energy operated for its global production and operations and achieve zero waste landfill goal, according to Ye.
By 2023-end, Trina aims to grow its overall module capacity to 95 GW, including 40 GW n-type modules, and cell capacity to 75 GW. Its Si ingot capacity will be 50 GW by the end of this year.
Executive Panel
Moderated by TaiyangNews Managing Director Michael Schmela, the panel discussion revolved around one of the world's largest and fastest growing solar markets, Europe.
Pointing at the several GW strong solar panel inventory in European warehouses, Wood Mackenzie's Juan Monge said since installers are not reducing costs despite the drop in module prices thanks to growing demand, there are no dramatic changes in the price pattern as of now.
In terms of installations, Europe could do much more currently, but the lack of trained installation staff and continued permitting challenges its growth is limited, he added. With right policy action, it could really open up much further, especially in the distributed generation segment.
Representing the manufacturing side was Head of Product Management, PV Business at JinkoSolar, Anne Meng who said the company offers various module products for all PV segments to satiate global demand, including from Europe. Since these are still available at competitive prices, Chinese manufacturers will continue to have an upper hand over local produce.
Monge recommended Chinese manufacturers targeting Europe to really move beyond just the big markets and explore emerging markets within the continent where the demand can grow exponentially. For such manufacturers, the Principal Analyst with Wood Mackenzie also had another advice, that is to factor in the growing regulatory environment in terms of standards for low carbon footprint, labor and supply chain transparency, and the like.
As standardization efforts kick in, Meng said JinkoSolar is planning 10 GW annual capacity for its rectangular module size from November 2023. Over the next 3 years, its technology roadmap includes tandem technology using TOPCon cell technology with a maximum efficiency of 33%.
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