Global demand for solar PV could rise up to 40% in 2023 as favourable economics in the solar sector combine with broad policies like the Inflation Reduction Act (IRA) and REPowerEU schemes.
Bloomberg Intelligence’s ‘Global Solar Energy Midyear Outlook’ report predicts that solar will remain the energy sector’s fastest-growing sub-segment, predominantly driven by its position as the most cost-effective electricity generation method in much of the world. Bloomberg credited solar PV with a levelised cost of electricity (LCOE) of around US$50/MWh.
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At the same time as installations are set to grow, sales for manufacturers are forecast to slow slightly as prices fall.
The price of modules is set to continue its downward trend this year, having declined 10% so far since December. Thus, sheer capacity additions are forecast to increase by 36% this year according to BloombergNEF’s mid-level scenario, compared with a ~26% increase in manufacturers’ sales.
Both LCOE and module costs are forecast to continue to decrease over this year and into 2024 as efficiencies continue to improve and manufacturing capacity expands, which will in turn prove a boon to project developers’ and installers’ revenues, the report said.
The falling cost of polysilicon – down almost 60% since December – will combine with a projected 50% increase in production capacity to boost manufacturers’ revenues further, the report said, with the risk of oversupply an increasingly real one.
Rob Barnett, BI senior clean energy analyst said: “Global solar demand may rise about 30-40% in 2023 with industry revenues increasing about 35%. Despite such fast top-line growth, solar share prices have trailed this year relative to the overall market, though we note that solar shares are performing broadly in line with the energy sector. We believe the rapid pace of growth can be sustained in 2023-25, which may boost sentiment and help lift consensus sales expectations in the years ahead.”
Looking to specific companies, the report highlighted manufacturers First Solar and Maxeon for particular success this year. This is largely thanks to the IRA incentives and tax credits, alongside the aforementioned price declines and increased demand. First Solar in particular has capacity orders at favourable prices locked in with companies like Intersect Power and Lightsource bp for the coming years, with a fully accounted for backlog of over 70GW as of April.
BI’s report follows similar forecasts and reports from energy analysts in recent weeks. Wood Mackenzie found that Q1 2023 was the best first quarter for US solar in industry history as supply chain issues began to resolve and delayed projects from 2022 came online. The report predicted this growth to continue through the rest of the year, with a potential tripling of the national market by 2028.
Europe was also earmarked for growth in the BI report following the European Commission’s REPowerEU plan which targets 320GW of deployed capacity and 30GW of manufacturing by 2025. A report from the European Solar Industries Association last week said that the 30GW target was possible with the right legislative environment.