Solar is driving a global shift in electricity markets

Solar energy is taking an increasingly prominent role in driving the ongoing transformation of global electricity generation markets alongside gains in storage, wind, hydroelectricity and energy efficiency.

The speed of this transformation is hard to grasp, particularly in the crucial China and India markets, but the results of 2017 are a good indicator of the trend.

Bloomberg New Energy Finance (BNEF) reports that 98 gigawatts (GW) of solar was installed globally in 2017, a 31% increase from the prior year. Meanwhile - and just as important - the levelized cost of solar dropped 15% year-on-year to US$86/MWh for capacity installed in 2017.

Leading the charge, China accounted for more than half the newly installed solar capacity, or some 53 GW, a figure that as recently as 2014 would have eclipsed the global total of solar installations.

While India’s current installation numbers aren’t as dramatic as China’s, India is clearly embarking on a massive transformation of its electricity sector as well. The country’s 2018 National Electricity Plan, released in March, affirms national intentions to increase renewable energy capacity to 275 GW by 2027, with solar representing two-thirds of this total. As renewables rise in India, thermal power capacity is forecast to decline to just 43% of the nation’s total in 2027, down from 66% today.

China and India are hardly alone on this front, as scores of other countries embrace solar. Saudi Arabia, for one, announced in March 2018 a plan to build 200 GW of solar capacity by 2030, yet another marker in the transition under way across global energy markets.

The uptake of solar is gathering momentum too in Europe and the Americas. The International Renewable Energy Agency published a report in January 2018 that concluded the following:

“Falling renewable power costs signal a real paradigm shift in the competitiveness of different power generation options. Continuous technology innovation remains a constant in the renewable power generation market.”

The solar-sector details in the pages that follow illustrate this shift. Global energy markets are changing, and fast. Last year saw a number of new solar milestones set:

• Record low utility solar tariffs, with deflation over the last two years hitting 50% in a number of markets ranging from Chile and Mexico to India and Saudi Arabia.
• A 1,547 MW project at Tengger, China, set a record for the being largest operational solar project globally.
• India’s push for development of “Industrial Solar Parks” has driven construction on a number of the world’s largest utility scale solar projects, including the nearly complete 2,225 MW Bhadla solar industrial park in Rajasthan, and with the State of Gujarat looking to beat that with an April 2018 announcement to build a 5,000 MW project.
• A new world record for the largest floating solar installation, 150 MW in China.
• A step-change in the commercially deployed cost of concentrated solar power (CSP).
• Commissioning of the world’s largest rooftop solar unit, of 19 MW in Punjab, India.
• A record high number of corporate power purchase agreements (PPA) of which an increasing number are incorporating solar.

BNEF reports that total new global solar installations reached 98 GW in 2017, a growth of 31% year-on-year. China surprised all energy expectations by installing a record 53 GW in 2017, 55% of the global total.

Cost deflation for PV solar and wind has been so extensive that it has created the risk that other renewable energy technologies, such as offshore wind and concentrated solar power (CSP), have already lost the race. However, gains in innovation and cost reductions are being increasingly being seen across a broad range of technologies.

As countries grapple with ever-higher shares of variable renewable energy generation, demand for system balancing will require a multitude of technology solutions including improved international grid connectivity, better demand response management, more pumped hydro storage, and appropriate system pricing signals to incentivise grid stability and peaking power supply. In this context, concentrating-solar technology and solar with storage have become increasingly valuable, cost-effective system tools.

What follows is an overview of solar expansion, illustrated through almost 100 examples of projects that are operational, under construction or in development.

Note: While this report describes many of the world’s largest solar projects, it is not intended as a comprehensive review, in part because of limited access to verifiable information on Chinese companies, for instance. Nor does this report capture the full scope of the trend towards solar. It is meant, rather, as a snapshot in time of fast-moving technology and up-scaling, and illustrates the expanding geographic uptake of large scale solar investments. The authors invite email feedback that elaborates on special projects and that can help inform updates to this report.

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Press release: IEEFA Report: Advances in Solar Energy Accelerate Global Shift in Electricity Generation

Please view full report PDF for references and sources.