Authors and contributors
Pharoah Le Feuvre
IEA (2019), "Tracking Power", IEA, Paris https://www.iea.org/reports/tracking-power-2019
Power generation from solar PV is estimated to have increased by more than 30% in 2018, to over 580 TWh. With this increase, the solar PV share in global electricity generation exceeded 2% for the first time. It remains the fourth-largest renewable electricity technology in terms of generation, after hydropower, onshore wind and bioenergy.
In 2018, total solar PV capacity additions globally were 97 gigawatts (GW), accounting for around half of total net renewable capacity growth. Solar PV capacity additions had doubled from 2016 to 2017, but in 2018 they remained stable. This is mainly as a result of a sudden change in China’s solar PV incentives to curb costs and address grid integration challenges to achieve more sustainable PV expansion. Capacity additions increased in the European Union, Mexico, the Middle East and Africa, which together partly compensated for the slowdown in China. Average selling prices of solar PV modules continued to decline by around 10-15% globally.
Propelled by strong policy support concentrated mostly in Europe, the United States and Japan, deployment of distributed solar PV systems in homes, commercial buildings and industry has been growing exponentially, with additions in 2018 reaching 41 GW. In most countries, commercial and residential systems already have electricity generation costs that are lower than the variable portion of retail electricity prices. The increasing economic attractiveness of distributed PV systems could therefore lead to a rapid expansion in the coming decades, attracting hundreds of millions of private investors.
Despite slower capacity growth in key markets in 2018, solar PV is well on track to reach the Sustainable Development Scenario (SDS) level by 2030, which will require electricity generation from solar PV to increase 16% annually, from 570 TWh in 2018 to almost 3 300 TWh in 2030.
With greater cost-competitiveness and continuous policy support, robust solar PV growth is expected in the next five years, led by China, European Union, the United States, India and Japan. Growth in Latin America and the Middle East is also expected to accelerate because of improved economic attractiveness and continued policy support.
In China, solar PV capacity additions slowed to 44 GW in 2018, compared with the exceptional growth (53 GW) in 2017 when the government phased out feed-in tariffs and introduced deployment quotas in June 2018 to control costs and tackle grid integration challenges. Overall, this policy shift is expected to make solar PV technology more cost-competitive within and outside China, leading to more sustainable development over the longer term.
Distributed solar PV capacity is expected to increase rapidly in China, driven by new auctions for commercial and industrial applications and subsidies offered to residential systems
Growth in the United States was stable, with around 10.6 GW of solar PV becoming operational in 2018 as a result of federal tax incentives and state-level policies. However, the corporate tax reform that affects the value of tax equity and import tariffs on solar PV modules has increased uncertainty over the economics of new solar projects. Some developers therefore delayed project commissioning in order to get more clarity on the new tax regime and the price of PV modules after the introduction of tariffs.
Strong growth is expected in distributed PV, encouraged mostly by attractive economics for self-consumption with remuneration for excess generation at or near retail rates, dedicated Renewable Portfolio Standard carve-outs and California’s rooftop mandate.
Innovation in solar power needs continued focus on increasing the performance of commercial PV systems and a shift to cell and technologies that are now only in the pipeline. At higher penetrations, innovation can enable PV to contribute to their own integration through smart grid capabilities, which can mitigate the impact of incidents on the grid. Innovation in digital technologies applied to solar PV systems can also deliver a higher share of mini- and off-grid systems and increase energy access in developing countries.
The wide array of system designs now available – off-grid, mini-grid and on-grid – increases the number of methods available to obtain electricity access. Off-grid technologies (such as stand-alone solar home systems), mini-grids and energy-efficient appliances are complementing efforts to provide electricity access from grid expansion. Such decentralised systems can help fill the energy access gap in remote areas by delivering electricity at a level of access that is currently too expensive to be met through a grid connection, and in urban areas by providing back-up for an unreliable grid supply.
While dramatic scale effects have been achieved in solar PV, R&D efforts focused on efficiency and other fundamental improvements in solar PV technology need to continue to keep on pace with the SDS. Mainstream technology at present is dominated by crystalline silicon. Within it, screen-printed Al-back surface field cells (Al-BSF) holds around three quarters of the market, with the remaining quarter dominated by Passivated Emitter Rear Cell technology (PERC). Strong global demand for higher-efficiency modules is driving a shift towards PERC and the next generation of technologies, like n-type HJT and IBC.
Higher PV shares, particularly in distribution grids, will necessitate the development of new ways to inject power into the grid and to manage generation from solar PV systems. The inverter and the rest of the power control system is generally the gateway for smart-management measures, and while technology has been proved, systems will need to become smarter and provide a broader range of voltage, reactive power and other ancillary services to the grid. Beyond making inverters smarter, the overall balance-of-system (BOS) costs (which include inverters) should be a key area of focus, as they can take up 40‑60% of all investment costs in a PV plant, depending on the region.