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Solar photovoltaics (PV) is a very modular technology that can be manufactured in large plants, which creates economies of scale, but can also be deployed in very small quantities at a time. This allows for a wide range of applications, from small residential roof-top systems up to utility-scale power generation installations.
Despite increases in investment costs due to rising commodity prices, utility-scale solar PV is the least costly option for new electricity generation in a significant majority of countries worldwide. Distributed solar PV, such as rooftop solar on buildings, is also set for faster growth because of higher retail electricity prices and growing policy support.
The exceptional growth in PV deployment in recent years will need to continue and scale up to follow the Net Zero Emissions by 2050 Scenario, requiring continued policy ambition.
Solar PV generation increased by a record 270 TWh (up 26%) in 2022, reaching almost 1 300 TWh. It demonstrated the largest absolute generation growth of all renewable technologies in 2022, surpassing wind for the first time in history. This generation growth rate matches the level envisaged from 2023 to 2030 in the Net Zero Emissions by 2050 Scenario. Continuous growth in the economic attractiveness of PV, massive development in the supply chain and increasing policy support, especially in China, the United States, the European Union and India, are expected to further accelerate capacity growth in the coming years. The tracking status of solar PV has therefore been upgraded in 2023 from “more effort needed” to “on track”.
Maintaining a generation growth rate aligned with the Net Zero Scenario will require reaching annual capacity additions that are close to three times higher than those of 2022 until 2030. Achieving this will require continuous policy ambition and effort from both public and private stakeholders, especially in the areas of grid integration and in addressing policy, regulation and financing challenges.
New, ambitious policies and targets introduced in the biggest solar PV markets will further accelerate capacity growth
Countries and regions making notable progress to advance solar PV include:
Solar PV electricity generation achieved another record increase in 2022, putting the technology on track with the 2030 milestones under the Net Zero Scenario
Power generation from solar PV increased by a record 270 TWh in 2022, up by 26% on 2021. Solar PV accounted for 4.5% of total global electricity generation, and it remains the third largest renewable electricity technology behind hydropower and wind.
China was responsible for about 38% of solar PV generation growth in 2022, thanks to large capacity additions in 2021 and 2022. The second largest generation growth (a 17% share of the total) was recorded in the European Union, followed by the United States (15%). Solar PV proved to be resilient in the face of supply chain bottlenecks, high commodity prices and the increase in interest rates experienced in 2022, and achieved another record annual increase in capacity (220 GW). This should lead to further acceleration of electricity generation growth in 2023.
Reaching an annual solar PV generation level of approximately 8 300 TWh in 2030, in alignment with the Net Zero Scenario, up from the current 1 300 TWh, will require annual average generation growth of around 26% during 2023-2030. This rate is similar to the expansion recorded in 2022, but maintaining this momentum as the PV market grows will require continuous effort.
Distributed systems play an increasingly important role in global solar PV deployment
Utility-scale plants were responsible for about half of global solar PV capacity additions in 2022, followed by distributed capacity in the commercial and industrial (25%) and residential (23%) segments. The share of utility-scale plants was at its lowest since 2012, as generous policy incentives drove record distributed PV capacity additions in China, Brazil, the United States and the European Union in 2020-2021.
In the context of high fuel and electricity prices in 2021-2022, distributed PV became an increasingly attractive alternative for many consumers, which has sparked investment. Utility-scale systems are the cheapest source of electricity generation in most parts of the world. However, building large-scale installations is becoming increasingly challenging in many countries due to the lack of suitable sites and complicated permitting procedures, which favours small-scale, rooftop PV systems.
Continuous support for all PV segments will be needed for annual solar PV capacity additions to increase to about 800 GW, in order to reach the more than 6 000 GW of total installed capacity in 2030 envisaged in the NZE Scenario. Distributed and utility-scale PV need to be developed in parallel, depending on each country’s potential and needs.
Solar PV manufacturing capacity expansion is well on track to exceed 2030 demand in the Net Zero Scenario
The solar PV market is dominated by crystalline silicon technology, for which the production process consists of four main steps:
In 2022, global solar PV manufacturing capacity increased by over 70% to reach 450 GW for polysilicon and up to 640 GW for modules, with China accounting for more than 95% of new facilities throughout the supply chain.
According to investment announcements by manufacturers and the expected impact of industrial policies introduced in the United States (IRA), India (Production Linked Incentive) and the European Union (The Green Deal Industrial Plan), global capacity will more than double in the next five years. However, despite these efforts to geographically diversify the supply chain, announced projects indicate that China is likely to maintain its 80-95% share in solar PV manufacturing capacity in this period.
While solar PV manufacturing capacity in 2030 is expected to be well above what is required to cover 2030 demand in the Net Zero Scenario, greater efforts are needed to increase the resilience and geographic diversification of the supply chain.
Crystalline silicon remains the dominant PV technology, with new, more efficient designs expanding their market shares
Crystalline polysilicon remains the dominant technology for PV modules, with a market share of more than 97%. Various different types of wafers and cells are used for crystalline polysilicon solar, with some more efficient than others. The shift to more efficient monocrystalline wafers accelerated in 2022, with the technology capturing almost all crystalline PV production. In parallel, a more efficient cell design (Passivated Emitter and Rear Cell [PERC]) is also expanding its dominance with almost 60% market share. Other new, even higher-efficiency cell designs (using technologies such as TOPCon, heterojunction and back contact) also saw expanded commercial production and captured about 35% of the market in 2022.
Strong policy support for solar PV is driving the acceleration in capacity growth
Policy support remains a principal driver of solar PV deployment in the majority of the world. Various types of policy are behind the capacity growth, including auctions, feed-in tariffs, net-metering and contracts for difference. The following important policy and target changes affecting solar PV growth have been implemented in the past couple of years:
View all solar PV policies
In 2022, solar PV further strengthened its leading position as the power generation technology with the most investment
Global solar PV investments in capacity additions increased by over 20% in 2022 and surpassed USD 320 billion, marking another record year. Solar PV comprised almost 45% of total global electricity generation investment in 2022, triple the spending on all fossil fuel technologies collectively. Investment in PV is expected to grow further in the coming years thanks to ambitious government targets, policy support and increasing competitiveness.
Many global and bilateral collaboration initiatives are advancing technological development and policy support for solar PV
Beyond global renewable energy initiatives that include solar PV (see Renewables), there are numerous international organisations, collaboration programmes, groups and initiatives aimed specifically at accelerating solar PV growth around the world, such as:
Solar PV is the main renewable technology of choice in the private sector
The private sector’s main activity in solar PV deployment can be divided into two categories:
Over the last decade, the amount of solar PV deployed around the world has increased massively while its costs have declined drastically. Putting the world on a path to reaching net zero emissions requires solar PV to expand globally on an even greater scale, raising concerns about security of manufacturing supply for achieving such rapid growth rates – but also offering new opportunities for diversification.
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Lengthy and complicated permitting processes are one of the main challenges to the faster deployment of utility-scale solar PV plants in many parts of the world, especially in Europe. Establishing administrative “one-stop shops”, developing clear rules and pathways for developers applying for a construction permit, determining strict timeframes for application processing, and public engagement in the identification of land suitable for investment could significantly accelerate solar PV deployment.
Distributed solar PV expansion, driven by rapid cost reductions and policy support, is transforming electricity markets. Currently, some distributed solar PV remuneration policies (like unbalanced net-metering) can have undesirable effects in the long term, disrupting electricity markets by raising system costs, challenging the grid integration of renewables and reducing the revenues of distribution network operators. Tariff reforms and appropriate policies will be needed to attract investment to distributed solar PV while also securing sufficient revenue to pay for fixed network assets and ensuring that the cost burden is allocated fairly among all consumers.
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. 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 solar PV market and technology have developed enormously in the recent years, R&D efforts focused on efficiency and other fundamental improvements in solar PV technology need to continue to remain on track with the Net Zero Scenario. Public support for R&D in solar PV technology can be an important factor in achieving further efficiency gains and cost reductions.
Higher PV shares, particularly in distribution grids, necessitate the development of new ways to inject power into the grid and to manage generation from solar PV systems. Making inverters smarter and reducing the overall balance-of-system cost (which includes inverters) should be a key focus of public R&D support, as they can account for 40-60% of all investment costs in a PV plant, depending on the region.
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