The solar energy industry is a constantly evolving marketplace. The speed at which the technology is advancing means that improvements are constantly being made. In some areas of the world, the cost improvements that have been made, now mean that solar has become the lowest-cost source of electrical generation. New application development, such as floating solar, mean that solar is now becoming an option for markets that previously would have ruled it out.
2018 was an incredible year for the solar industry globally. It was the first time over 100GW of Solar capacity was installed in one year. 2017 saw an additional 98.5GW added to the global market, with 2018 adding an additional 102.4GW to the cumulative capacity around the world. The global installed capacity is estimated to be approximately 500GW.
Despite 2018 being a strong year for solar growth, expectations were significantly higher. One of the main reasons for this missed target was a slow down in growth of the Chinese market. In 2017 a capacity of 52.8GW was installed across China, in comparison, 2018 only saw a growth of 44.6GW. India and Japan also saw a reduction in growth, and the US market stayed at a level with their 2017 growth. These 4 countries are 4 of the largest solar markets on the planet, for their growth to slow down significantly it is going to have a large impact on the global market.
The vast growth of the Chinese market becomes apparent when compared to the European market as a whole. Across 2017 and 2018 China installed a total capacity of 97.2GW, whereas Europe only installed 20.6GW. In 2017 China’s growth accounted for over 50% of the solar installed globally. China had a market share of 55% of the new installations in 2017, this is expected to drop to 20 of new installations in 2023.
Whereas some of the larger markets are experienced a reduced level of growth, the smaller markets are growing at an increased rate. In 2017 nine countries installed over 1 GW of solar within that year, in 2018 there were 11, in 2019 this number is expected to be 16. The expected total growth during 2019 is expected to be 115GW worldwide. A recent report by Wood Mackenzie Power & Renewables expects the global market to see considerable growth year on year. Their belief is that the growth in the Chinese market peaked in 2017 and other markets will pick-up the shortfall moving forward. Their expectation is that the Chinese market will level out at an annual growth of 30-40GW, still an impressive figure.
Over the next 5 years the growth in the Middle East is expected to be quite aggressive. Saudi Arabia, Iran and Egypt are expected to hit some aggressive growth targets cementing themselves into the top tier of growth for solar worldwide. It is markets like these that will reduce the reliance on China for global growth in the solar marketplace.
One of the greatest benefits of using renewables is the reduction of the use of fossil fuels and their contribution to global warming. While many targets for increasing the use of renewables are set by governments, the market in the US is of interest in the wake of the Presidents comments in the last year. Much of the growth in the US is being driven by corporate companies rather than government targets.
One of the interesting things when looking at the global solar market is the changing hands of already installed projects. Financiers are becoming more accommodating to viewing solar installations as an asset. This increasingly apparent in the US. In 2018 21GW of already installed solar projects changed hands. This is up 38% on 2017. Of these 2018 transactions, 47% took place in the US.
The growth within the renewables market and predominantly the solar market is expected to continue to grow for some time. The increasing cost of fossil fuels means that by installing renewable energy sources a country is securing its future, by reducing the reliance on fossil fuels. The pressure on businesses to increase their green energy usage is only going to get higher. This pressure is from all levels, government departments all the way down to employees and customers. These 2 factors are going to drive corporate growth and usage on a company level for many years to come.
Government and consumer growth will also continue to grow. Solar is becoming an increasingly valuable option when looking to provide electricity to developing areas and remote locations. The idea that solar power is reducing fossil fuel usage is not always the case. In many cases the new solar projects are providing electricity to people who previously did not have access to electricity. This will reduce the level of fossil fuels being used as a percentage of total global energy generation, however may not have as big an impact on physical amount of fossil fuels being used.
This idea of providing electricity to new users is a concept that is suited perfectly to solar in some areas. This creation of mini-grids in remote areas without current electricity supply is something that may become more normal as time goes by. With the constant increase in technology of solar products and also wind and battery technology, it is now easier to provide a hybrid solution that can provide power 24 hours a day. While this may not be an option everywhere on the planet, there are many areas across Africa that this solution would work.
Following on from the growth that has been seen over recent years, with the constant advances in technology coupled with the increased pressure of switching to green energy. The growth in global solar installations will not slow down any time soon. It will also start providing electricity to communities that have never had it before.