Solar PV additions have seen significant increase over the past few years, while it is also leading the increase in new renewable capacity worldwide this year, according to the International Energy Agency’s latest report Renewable Energy Market Update June 2023.
Globally, net additions of solar PV were 220GW last year, a 35% increase from 2021. However, overall renewable energy capacity additions rose by only 13% to nearly 340GW in 2022.
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Expansions in China and the European Union (EU) accounted for more than 85% of the growth in annual PV capacity additions. The annual growth rose in almost all major markets last year except the US, as this market shrank by 15% due to supply chain challenges and rising costs.
In the upcoming years, solar PV additions will continue to grow as the IEA expected that it will account for two-thirds of next year’s entire renewable capacity additions.
In 2023, solar PV will remain the main source of global renewable capacity expansion, accounting for 65% of growth with distributed applications, including residential and commercial systems that will account for almost half of global PV expansion. The growth of distributed applications is partly due to Russia’s invasion since it drove wholesale and retail electricity price hikes in many parts of the world. Therefore, small solar PV systems will become more economically attractive for residential and commercial customers.
Looking forward, the annual solar PV market growth is expected to continue, reaching almost 310GW in 2024, an increase of over 7% from 2023. Lower module prices, greater distributed PV system uptake and a policy push for large scale deployment will trigger higher annual additions in all major markets, including China, the EU, the US and India.
IEA revised the forecast for renewable capacity additions for 2023 and 2024 upwards by 38% compared to its estimation made in December 2021, increasing from more than 80GW to about 120GW. In the EU, residential and commercial solar PV systems will account for 74% of the increase to IEA’s forecast, with the majority (82%) of the rise coming from six key markets: Germany, Spain, the Netherlands, France, Italy and Sweden. Retail electricity prices hike between 2021 and 2022, as well as policy changes after Russia’s invasion of Ukraine, contributed to the rapid growth of distributed solar PV.
Apart from solar PV capacity additions, manufacturing capacity for all solar PV production segments is expected to more than double to 1,000GW by 2024, led by China and increasing supply diversification in the US, India and Europe.
Last year, global solar PV manufacturing capacity increased by more than 70% to reach almost 450GW, with China accounting for over 95% of new facilities throughout the supply chain. In both 2023 and 2024, global solar PV manufacturing capacity is expected to double and China will claim over 90% of the increase.