IEA (2019), Solar Energy: Mapping the Road Ahead, IEA, Paris https://www.iea.org/reports/solar-energy-mapping-the-road-ahead
Solar Energy: Mapping the Road Ahead is a collaborative effort of the International Energy Agency (IEA) and the International Solar Alliance (ISA) to provide government, industry and civil society stakeholders with the methodology and tools to plan and implement national and regional solar energy roadmaps. Despite plummeting costs, solar energy expansion still depends largely on policy makers setting ambitious targets and implementing sound policies, market designs and regulatory frameworks, including for technological research, development and deployment.
This guide for policy makers addresses all solar technologies – solar photovoltaic (PV) electricity, concentrating solar power (CSP, or solar thermal electricity [STE]), and solar heating and cooling (SHC). As well, it looks at applications such as utility-scale PV and CSP power generation; on- and off-grid distributed electricity generation; solar thermal water/space heating and cooling; solar heat for industry; solar cooking; and solar fuels.
Sound knowledge of solar energy resources, its constituents (direct and diffuse radiation) and variations across time scales is a prerequisite. Solar resources must be analysed together with energy demand, its elements (electricity, heat, transport, fuel) and its variations from one time period to another. Importantly, this guide also addresses resource variability and key energy access concerns.
Designed for decision makers in developing and emerging as well as developed economies, this guide does not cover every aspect of solar energy technology, policy and deployment. Rather, it aims to provide a comprehensive list of steps and issues for each phase of solar energy roadmapping and deployment. Selected case studies encapsulate the wide array of existing applications, and discussions of deployment drivers and barriers are accompanied by realistic recommendations for actions, tools, and useful information.
Sound knowledge of solar energy resources, its constituents (direct and diffuse radiation) and variations across time scales is a prerequisite. Solar resources must be analysed together with energy demand, its elements (electricity, heat, transport, fuel) and its variations from one time period to another.
Solar technologies use the radiative energy of sunshine in a wide spectrum of applications to provide electricity, heat and cold, and even fuel. Rather than assessing them separately, photovoltaic (PV) energy, concentrating solar power (CSP) and solar thermal heating and cooling (SHC) should be considered as complementary technologies.
PV technology is unique in its extreme scalability, ranging from watt-scale individual systems to kilowatt- and megawatt-scale distributed domestic and industrial power systems and to power plants of hundreds of megawatts. It can thus provide off-grid electricity access as well as power micro- and mini-grids, strengthen grids at their fringes, and deliver significant power to fully developed existing networks.
PV and CSP are the two main technologies for generating electricity from sunshine. While PV is less expensive, CSP with built-in thermal storage can improve power system flexibility and stability, increase the solar share and integrate more variable renewable energy. Solar power can also be used to produce and export hydrogen-rich chemicals and fuels.
The portfolio of SHC options is even larger, with solar thermal systems offering highly efficient solutions at various temperatures and for different applications (domestic hot water, space heating, district heating, process heat and even thermally driven cooling) in addition to solar electricity-driven heating and cooling devices. While solar thermal energy is currently used primarily for domestic water heating, it has considerable potential to generate process heat in the future.
Elaborating and implementing roadmaps would help ensure successive deployment. The process is as important as the content of the documents, and it should associate all stakeholders, and ensure the collaboration of many ministerial departments at the higher possible level.
The International Energy Agency and the International Solar Alliance have joined forces to produce this guide providing policy makers, industry, civil society and other stakeholders with the technological information and methodological tools to map a course towards robust, accelerated solar energy deployment. Despite plummeting costs, solar energy expansion still depends largely on policy makers setting ambitious targets and implementing sound policies, market designs and regulatory frameworks, including for technological research, development and deployment. This guide aims to provide a comprehensive list of steps and concerns for each phase of solar energy roadmap design and implementation; an overview of deployment drivers and barriers; realistic recommendations for actions and tools; and useful information sources.
The IEA approach to roadmap development involves two streams of activities (analysis and consensus-building) in four phases (planning and preparation; visioning; roadmap development and implementation; and monitoring and revision).
Unprecedented deployment and cost reductions have taken place in the past ten years: photovoltaics (PV), initially one of the most expensive electricity-generating technologies, has become one of the most affordable. Dispatchable power from hybrid PV-concentrating solar power (CSP) plants was highly competitive in the most recent auctions, and solar thermal technologies are penetrating new markets for industrial processes and district heating networks.
Progress across countries and technologies is uneven, however, and despite plummeting costs and 20 years of uninterrupted global growth, the amount of new solar technology additions in 2018 was similar to the previous year (PV additions remained below 100 gigawatts [GW]). Even worse, the solar heat market has been shrinking continuously since 2013 and is not being counterbalanced by the ongoing renaissance of the much smaller CSP market.
This paradox reveals that numerous barriers – fossil fuel subsidies, administrative obstacles, economic difficulties for grid operators and absent or weak support policies and targets – still impede widespread solar energy deployment. Predictable polices based on clear, long-term targets remain essential to cost-effectively unlock the immense potential of solar energy.
Policy makers in most jurisdictions must therefore set targets consistent with their needs and circumstances, framing policies accordingly and designing regulatory and market frameworks conducive to investment. Together with the energy ministry, the implication at the highest possible level of many other ministerial departments is important to set objectives in their respective sectors, to remove barriers to investment and achieve successful deployment.
Investment barriers are not the same for all technologies. Although PV efficiency is continuing to improve rapidly, its costs are falling quickly and it is a mature technology, upfront investment costs remain high for many potential solar customers. Money for safe, long-term investments is available, but market and policy risks for solar technologies need to be minimised.
For utility-scale projects, distribution companies’ finances are often an issue in developing economies, so decisive policies must be enacted (as in India). Grid integration issues are often feared unnecessarily, so it would help if the experiences of countries that already use significant shares of variable renewables were more widely shared – although it is important to highlight contextual differences. In hot, humid countries, combining solar energy with hydropower can often be a straightforward means of supplying power on demand.
New business models support expanded on- and off-grid PV self-consumption at various scales, for agricultural, extraction, industrial and service sector production to home systems and small appliances. The extreme scalability of solar PV makes it a great asset for achieving universal energy access. Clean cooking, already being experimented with in India, may be the next step.
CSP combines well-proven technologies (commercialised in the 1980s) with more recent concepts. In hot, dry countries, its use is likely to increase as PV electricity saturates daytime demand, initially to respond to demand peaks after sunset (as in Morocco) and then to deliver power around the clock (as in the United Arab Emirates). Lead times for development are long and capital needs are high, and only resolute policies will overcome these obstacles. The involvement of bilateral and multilateral development banks is often necessary.
Solar heating and cooling (SHC) technology success has been mixed. Space heating applications are becoming more common for large-scale district heating systems and are increasingly being integrated into building designs. Industrial heat applications are also expanding, though from a small base. Although solar thermal cooling technology benefits from a good match between demand and resource availability, it is in direct competition with PV systems. Meanwhile, the market for the most mature technology – domestic water heating – is shrinking. Temperate countries should review and strengthen their renewable heat policies (especially for solar heat), as they often lag behind those for electricity.
The process of devising a roadmap is as important as the roadmap itself for ensuring the success of solar energy technologies. The first phase of roadmapping – identifying all stakeholders and engaging in extensive dialogue – is decisive. It leads to the second phase, the building of a common vision.
Elaborating a vision requires that the energy needs of the economy and the population be analysed in their complexity of forms (e.g. electricity vs. heat) and variability, together with solar resources (including temporal and locational variations) and other available energy resources.
Then, the most relevant technology options to harness solar energy for either electricity (PV and CSP) or heat (SHC, or even solar fuels, can be identified. It is crucial to take a holistic approach, and clear, long-term targets must be set. The next step in the process is to identify barriers and ways to overcome them, and to assign responsibilities.
Monitoring implementation is the fourth phase. It may require policy-strengthening, but targets may also be updated and upgraded as problems are solved and costs continue to fall.
Governments should develop solar power roadmaps based on analyses of both their energy needs and the heat and electricity opportunities offered by various technologies.
The process of developing and implementing a roadmap is as important as the document itself, and it should associate a wide array of stakeholders and interests. Roadmaps should present a vision, delineate targets and define actions to overcome deployment barriers.
Reducing investment risks appears to be crucial for solar technology deployment now that falling costs offer numerous opportunities for profit. Policy makers and regulators are responsible for defining and implementing regulatory frameworks as well as market designs conducive to investment (and for rapidly connecting solar technologies to the grid when appropriate).
Although financial support for solar technologies may still be needed to jumpstart deployment in new markets, excessive profitability is not a remedy for non-economic barriers, so total support costs should be carefully monitored. At least for large-scale plants, incentives should be rapidly steered towards competitive auctions for long-term power purchase agreements, possibly with some forms of energy management options (curtailment, storage, etc.) and time-based pricing facilitating system integration.
Solar roadmaps should not be undertaken by the energy administration alone. Virtually all other ministerial departments can be interested (if only as energy customers in their day-to-day work) and many would need to be involved as well.
Policy makers are not alone, and can request help from an array of international organisations. The International Solar Alliance, as well as multilateral and bilateral development banks and agencies, offers help and a variety of tools, including financing.
Three main technology types are used to harness energy from the sun: photovoltaic (PV), which directly converts light into electricity; solar thermal, or solar heating and cooling [SHC], which uses using solar radiation to deliver heat; and concentrating solar power (CSP), which converts concentrated light into heat to drive a heat engine connected to a generator. PV energy, for which cost reductions in the last ten years have been impressive, currently constitutes the most dynamic global market, but the significant possibilities offered by the other technology families must also be considered when laying out a pathway for full-scale solar energy use.
PV cells and modules directly convert solar energy into electricity, using both direct and diffuse radiation. PV technology can be used on the grid or in off-grid applications at capacities ranging from less than 1 watt (W) to gigawatts (GW). On-grid residential systems, often rooftop installations, typically reach the kilowatt (kW) scale; commercial systems, often installed on flat roofs or over parking lots, are in the order of megawatts (MW); and ground-based plants for utilities range from tens to hundreds of megawatts. Grid-connected systems require inverters to transform direct current (DC) power into alternating current (AC). Installations can be fixed or track the sun, usually on one axis only. Off-grid applications range from several watts for initial energy services to mini-grid applications with battery backup, or hybrid designs that complement diesel generators. Although PV was an expensive electricity-generating technology only ten years ago, it is rapidly becoming one of the most affordable. It has overtaken SHC energy supply by 2018 (Figure 1). In the next five years, annual capacity additions will grow from 115 GW to about 130 GW. The total cumulative capacity will reach 1 TW by 2023 at the latest, and 1195 to 1375 GW by end 2024 depending on the case.
Figure 1. Energy supplies from the three solar technology families (top) and global solar PV annual additions by segment, 2013-24 (bottom)
PV modules usually face the equator, with the tilt determined primarily by latitude, but it can also be adjusted to adapt to the ratio of diffuse vs. direct irradiance, or for economic reasons. The tilt tends to equalise electrical outputs despite differing solar resource abundance among regions. A growing proportion of utility-scale plants are also using one-axis trackers to further augment output. The introduction of bifacial technologies may offer additional flexibilities in the overall system design.
Solar light can be captured and transformed by a variety of solar thermal technologies and utilised as heat in numerous applications, from domestic hot water to space heating at the individual and collective (district heating) level, as well as for agriculture and industry. Solar air conditioning and industrial cooling can be provided by solar thermal technologies or by PV-run devices. Technologies to store cold can improve the already good match between sunshine and cooling needs, whereas concentration technologies can provide high-grade heat or steam for industrial processes and offer more cost-effective heat storage options. Several large-scale solar concentrating steam plants are under construction in the Middle East and the United States to replace gas-fired ones for enhanced oil recovery operations.
Figure 2. Average auction price by project commissioning date
CSP technology concentrates solar rays to heat a fluid that then directly or indirectly runs a turbine and an electricity generator. The predominant CSP technologies are parabolic troughs (PTs) and solar towers. Unlike PV systems, CSP plants use only direct irradiation and therefore need a daily minimum of sunshine to produce electricity. This limits their use to hot, dry areas with clear skies and reduced dust.
Solar thermal electricity costs more than PV electricity, but it also offers more: CSP plants can integrate thermal storage to deliver electricity on demand, and they contribute to power system stability and flexibility by making it possible to integrate more solar PV and wind power. Different combinations of solar field size, storage tank size and electricity capacities provide great flexibility in CSP plant design. Solar thermal electricity is currently most valuable when generation is shifted to after sunset to complement PV electricity; in the not-too-distant future, all-night generation will be required to further increase the solar share in total electricity generation and reduce the use of fossil fuels (Figure 3).
Figure 3. Conceptual daily energy mix with PV and CSP, medium term (left) and long term (right)
Solar irradiation consists of direct and diffuse radiation. Direct (or beam) radiation experienced as ‘sunshine’ comes directly from the sun’s disk, whereas the diffuse radiation experienced as ‘daylight’ comes from numerous directions. Because solar resources vary daily and seasonally, it is important to consider the extent to which resource availability matches heat and power demand variations, as their correspondence will determine the type of facility required and can signal possible difficulties in deploying solar energy technologies to satisfy energy needs.
Global horizontal irradiance
Global horizontal irradiance (GHI) measures the density of solar resources available per horizontal surface area, including both direct and diffuse radiations. Other measures of resource availability also need to be considered, depending on the technology to be deployed. For concentrating solar technologies for power or industrial heat particularly, the relevant metric is direct normal irradiance (DNI).
Direct normal irradiance
Record-level PV capacity growth has dominated renewable energy expansion in recent years, and prices have fallen drastically since 2010 – by four-fifths for modules and by almost two-thirds for residential systems. Although growth of PV installation stalled for the first time in 2018, remaining below 100 GW of new PV capacity, growth resumed in 2019 reaching a record 115 GW (estimated) installed in over 110 countries. Cumulative global capacity reaches 609 GW, far surpassing CSP capacity estimated at 6.5 GW by end 2019. In 2018 PV exceeded cumulative solar thermal panel capacity (then 480 gigawatts thermal [GWth]) for the first time.
Owing to significant cost reductions as well as private sector and government initiatives, off-grid solar PV applications have begun to bridge the electrification gap in Asia and sub-Saharan Africa. Mini-grids as well as industrial, agricultural and commercial applications and solar home systems (SHSs) can provide an immediate solution for initial or improved electricity access for households, small businesses and industries.
The private sector’s market-led solar appliance revolution of recent years resulted from the ability of a single solar PV panel to supply DC electricity to a distinct solar appliance. Appliances such as portable lanterns, fixed LEDs, phone chargers, fans, TVs, pumps, fridges, vaccine coolers, laptops, rice-cookers, etc., can therefore be operated anywhere on electricity from sunlight.
Solar Home Systems (SHSs) are PV systems that often have a peak capacity in the 100 W range and are installed in off-grid residential dwellings and equipped with a battery for lighting and for powering various appliances for several hours per day. Operated under new business models such as ‘pay as you go’, SHSs that entered the market just in 2017 gave an estimated 6 million people initial access to electricity. In Bangladesh alone, 12 million people have already gained access to electricity through SHSs.
Larger off-grid solar energy systems are often used for either primary electricity or for backup power during the brownouts and blackouts that frequently occur in developing countries. These systems can generate electricity in an off-grid mode for mines, telecom towers, greenhouses and other agriculture equipment, hotels, hospitals and schools.
For solar heating technologies, even though the Chinese market is shrinking, it is still the world leader by far. After declining since 2009, European markets regained growth in 2018, and some emerging economies have demonstrated market dynamism. While individual solar water heating systems dominate the global market, in several countries (especially Denmark) the installation of large-scale solar thermal plants connected to district heating systems or large buildings has been expanding.
While CSP growth has stalled in the former leading markets of Spain and the United States, a second wave of projects is emerging in the Middle East, Africa and China as market prices fall. The share of projects with built-in thermal storage is increasing, as is storage size.
More than 120 countries now have renewable energy targets for their power sectors – twice as many as in 2010. Support policies in most countries are evolving from open-ended feed-in tariffs to auctions for stable, long-term remuneration mechanisms that may be adapted to delivery times and locations or combined with market prices, to both de-risk investment and offer an incentive to deliver electricity at times and locations that are more beneficial for the power system. For smaller rooftop systems, there is also a shift towards incentivising self-consumption, with various schemes designed to remunerate electricity injected into the grid.
Solar technology costs have dropped drastically in recent years, especially for solar PV. Another factor that has helped reduce the levelised cost of electricity (LCOE) in many countries is the reduction of investment risks. Perceived risk is expressed by the weighted average cost of capital (WACC), composed of interest on bank loans and expected investment returns for equity investors.
This figure reveals the importance of investment risk, depicting the LCOE as the sum of capital expenditures (capex), operations and maintenance (O&M) expenses, and the cost of capital (its share is represented on the right axis). With a WACC higher than 9%, the costs of capital account for over half the kWh cost.
In a comparison of two projects with similar system costs, O&M expenses and solar resources but different WACCs (5% vs. 15%), the second project’s LCOE is twice as high. The WACC, which is often overlooked, is important because the bulk of PV plant expenditures occur upfront, before the plant delivers its first kWh.
WACCs can vary considerably depending on the country, policy framework and perception of risk by investors and banks. This is why, even though subsidies are no longer required for solar projects in many cases, governments and regulators have an obligation to establish a risk-mitigating regulatory framework that delivers sufficient certainty relative to returns on investment.
Share of financing costs in the LCOE of solar PV
Wind and solar PV capacity have expanded very rapidly in many countries as a result of supportive policies and dramatic drops in technology costs. By the end of 2018, these technologies – collectively referred to as variable renewable energy (VRE) – had attained double-digit shares of annual electricity generation in 20 countries. The IEA classifies VRE integration into six phases as shares increase. While Figure 4 indicates the VRE levels reached in some countries and regions, Figure 5 illustrates these six phases and the four pillars of flexibility: power plants, grids, demand-side response (DSR) and storage.
Figure 4. VRE shares in total electricity generation by selected region, 2018
The first two phases of integration are easily manageable owing to the flexibility of power systems, but close policy-maker attention is nevertheless very helpful at this stage. Attention should focus on grid connection codes, on adequate forecasting of solar PV (and wind) plant output, and on managing the interface between high- and low-voltage grids. Moreover, steps must be taken to adapt renewable energy deployment to the needs of the wider power system, not only the reverse. This relates especially to the complementarities of technologies with different output profiles (PV, wind, CSP) and to the localisation of new plants, but may also affect plant design and management.
In phases 3 and 4, PV (or wind) accounts for large shares of the power mix. Power system flexibility may need to be increased at this point by implementing DSR, expanding grid interconnections, raising hydropower capacity, using CSP and other thermal plants in a flexible manner, and eventually expanding storage from pumped storage hydropower and batteries.
In the final phases of integration (5 and 6), seasonal imbalances may be the primary impediment to integrating very large shares of solar and wind, with risks of shortages during periods of low sun and wind, and large surpluses at times of high electricity generation and low demand. Flexible electrification of end-use sectors (buildings, industry and transport) and the production of electricity-based hydrogen and hydrogen-rich fuels could provide seasonal renewable energy storage in addition to further decarbonising the overall energy mix. Producing such fuels could also make use of stranded renewable resources in regions with excellent solar and wind potential, launching a novel global energy trade.
Figure 5. The six phases of VRE integration and the four pillars of flexibility
Solar Energy: Mapping the Road Ahead aims to provide government, industry, civil society and community stakeholders with the methodology and tools to successfully plan and implement national and regional solar energy roadmaps. This guide’s holistic approach encompasses all solar technologies – solar PV, CSP and SHC.
Figure 6 illustrates the two streams of activities that make up roadmap development: those that focus on analysis (in orange) and those centred on decision-making and consensus-building (in blue).
The evolving process by which a roadmap is created, implemented, monitored and updated is crucial to achieve the goals it sets out. Creation of the plan should maximise stakeholder engagement to build consensus and increase the likelihood that those involved will implement the roadmap’s priorities and together seek early solutions to anticipated barriers. Ideally, a roadmap is a dynamic document that incorporates metrics to monitor progress in meeting its stated goals, and is flexible enough to be updated as the market, technology and policy context evolves.
The overall process should be overseen by the government, as many ministerial departments could be involved together with the ministry in charge of energy. Virtually all have buildings and services that require energy supply to service the population. Many are also relevant for their action.
For example, the agriculture department is concerned by many applications, from combining PV panels and crops or pasture, running water pumping, transformation processes, etc. The education ministry could help disseminate information to children and through them, families, as well as to older students. The health department is concerned with providing electricity to health services, as well as food preservation, which is also of interest to the ministries of agriculture and economy. The ministry of transportation could help in transitioning from fossil fuels vehicles to solar mobility services. The finance ministry could play an important role in removing subsidies to fossil fuels and introducing some initial support to solar deployment. The ministry in charge of habitat could help link energy efficiency and PV deployment in responding to a growing demand for space cooling… and this list is not exhaustive.
The ISA is available to help countries elaborate their own solar roadmaps, organised around their respective national focal points.
Figure 6. The roadmap development process
The four phases in brief
The planning and preparation phase involves examining the technological, market and public policy situation specific to the solar technologies covered by the roadmap. In addition to this broad analysis, a comprehensive understanding of solar potential and resources must be developed.
Because the range of essential solar energy stakeholders is wide in most countries, not only is it critical to identify them early in the process, it is also important to consider how they should be involved in roadmapping at the different levels of engagement (Responsible, Authorised, Consulted and Informed).
The second phase of roadmapping involves developing a vision for solar technology deployment in the country or region within a specified time frame. A clear statement of the drivers for using solar energy is essential to develop the roadmap’s vision and long-term goals.
Clear, realistic targets are an important component of any national or regional roadmap’s guiding vision. A precise vision and credible goals make it easier to implement a roadmap effectively, particularly when targets are mandatory rather than aspirational. Although energy infrastructure, energy demand profiles and solar resource accessibility differ from one country to the next, global analyses such as the IEA’s Sustainable Development Scenario may nevertheless help guide efforts (Figure 7).
Figure 7. PV and CSP generation in the Sustainable Development Scenario
The next phase, roadmap development, is devoted to identifying barriers to solar technology deployment, as well as the actions necessary to overcome them and those responsible for carrying them out. Barriers can be non-economic, such as institutional, administrative, permitting and public acceptance obstacles, among others. Or, they can be economic, often resulting from framework or market design shortcomings that magnify perceived risks for investors and lenders.
The fourth and final phase of roadmap development covers monitoring its implementation and establishing a mechanism for regular updating. This is an ongoing activity, with tracking and monitoring occurring on a regular basis through a variety of indicators. Support mechanisms and targets should also be revised and adjusted frequently because even proven solar technologies are still evolving quite rapidly and costs are continuing to fall. If support mechanisms take the form of a subsidy, they should not be excessively generous at the expense of taxpayers; meanwhile, targets should be enlarged as costs fall, justifying a greater solar contribution to the country’s energy needs and economic development.
Full references for the data behind IEA figures and/or tables featured on this page can be found in the PDF of the full report.
Full references for the data behind IEA figures and/or tables featured on this page can be found in the PDF of the full report.