by Emma Foehringer Merchant
August 05, 2019

Global solar growth is back on track, after a “blip” of a downturn in 2018, according to newly released forecasts from Wood Mackenzie Power & Renewables.

Worldwide PV installations are set to exceed 114.5 gigawatts in 2019, the first time global capacity will surpass 100 gigawatts annually. 

China, India and the United States still dominate global installations, responsible for more than half of additions over the next five years. But emerging markets are increasingly becoming the ones to watch, as new markets flourish and big growth lands in more recently opened regions. 

In this week’s column I break down the latest global solar trends.

The stalwarts 

The trifecta of dominant markets — the U.S., India and China — will remain on top in the mid-term, and it's not even close.

Source: Wood Mackenzie Power & Renewables

This year the U.S. exceeded the 2-million-installation mark for solar. Industry boosters claimed it as a significant milestone, even if it arrived a year later than originally expected due to a slowdown in the residential sector. 

A spate of newly passed clean energy requirements and renewable portfolio standards from U.S. states will help spur further growth, with the utility-scale sector slated for 46 percent growth in 2019 over the past year. 

India is expected to install just over 11 gigawatts in 2019 as auctions pick up after a slowdown. Installations are expected to grow 36 percent year-over-year compared to growth of just 1 percent last year. Despite the increase, analysts are skeptical that the country will meet its big-time target of 100 gigawatts of PV by 2022 and 250 megawatts by 2030.

Europe also continues to gain steam with a 65 percent spike in installations forecast for this year, amounting to 17.4 gigawatts. Spain will account for a large portion of that growth, according to WoodMac senior solar analyst Tom Heggarty, as it adds 4 gigawatts of large-scale projects before the end of the year. 

What’s up with China?

Among major markets, China alone accounts for about 200 gigawatts of growth over the next five years. 

That’s despite a recent chill in the Chinese market stemming from a rework of its solar policies. Last year the government announced it would end subsidies in attempts to push the market toward sustainable grid parity. The government recently finalized policy incentives, like priority dispatch, for solar pipeline projects that opt to go subsidy-free.

China currently has 6.4 gigawatts of subsidy-free projects in the 2019 grid-connection pipeline. As the transition away from subsidies continues, analysts expect 2019 to be the global solar leader’s lowest year of annual installations since 2016.

Though the policy changes were a shakeup, WoodMac solar analyst Rishab Shrestha said the government’s “swift execution of auction and subsidy-free policy” boosted WoodMac’s forecast. 

Not to be sidelined, China also broke a record this year with the largest solar auction ever held, at 22.78 gigawatts. Even in an off year, China is expected to install 37.7 gigawatts, which dwarfs all other markets.

And China’s muted growth hasn’t restrained regional gains, according to Heggarty.

“Even with the slowdown in China, the Asia-Pacific market is continuing to show growth, and all other regional markets are growing too,” he said. 

New markets to the front

Even as the “big three” continue to carry much of worldwide capacity, the global solar market is becoming increasingly diffuse. The number of countries with between 1 and 5 gigawatts of annual installations is expected to spike from seven in 2018 to 19 in 2022.

Source: Wood Mackenzie Power & Renewables

Twelve countries will lay claim to annual installations between 1 and 5 gigawatts this year.

Auctions will continue to be the driver of growth in most of those emerging markets. 

“Competitive auctions continue to be key in opening up new markets,” said Heggarty.

Analysts expect auctions to fuel nearly 90 gigawatts of awarded project contracts in 2019, compared to 81 gigawatts in 2018.  

Source: Wood Mackenzie Power & Renewables

Auctions will be particularly important in the Asian market, with Europe and the Middle East accounting for a large portion of capacity awarded through competitive auctions.

With auctions the norm, bids continue to sink lower. This year the world also got a new record-low power-purchase agreement price. It’s the first time a project in Brazil has claimed the title, pulling in prices at $16.90 per megawatt-hour — $2 lower than the last record, set by Mexico in 2017 at $18.90 per megawatt-hour. 

The trend toward auctions is aligned with a preference for utility-scale PV in emerging markets in the next five years. Utility-scale solar will account for 56 percent of global installations through 2024, including as much as 80 percent of the market in India and 97 percent in Saudi Arabia.

Source: Wood Mackenzie Power & Renewables

“Bigger seems to be better,” write the WoodMac analysts in their report, “particularly in emerging markets.” 

In Q2, the utility-scale pipeline ballooned to 313 gigawatts, up from 274 gigawatts in the first quarter of the year. Looking ahead, the average project in development clocks in at 300 percent larger than projects already in operation.

The Middle East is expected to see the largest projects, with under-development plants averaging above 200 megawatts. The Abu Dhabi Water and Electricity Authority, working with JinkoSolar and Japanese trading company Marubeni, is expected to finish its 1.7-gigawatt PV plant this year, slated to rank as the largest in the world. The 300-megawatt Sakaka project in Saudi Arabia is also set to finish construction this year.

Because of large projects like those, the Middle East’s solar market will more than double — again — in 2019, reaching 3.7 gigawatts. Analysts expect even greater gains in the Middle East in the next five years, with annual PV installations expected to grow tenfold between 2018 and 2024. 

The African continent is seeing similarly large installation increases, with grid-tied solar installations expected to triple to 3.5 gigawatts in 2019, representing year-over-year growth of 227 percent.    

While markets in those regions have been slower to catch on, they’ve been able to capitalize on a late-mover advantage, and, in the case of the Middle East, huge economies of scale.

“Many emerging markets in Africa and the Middle East have circumvented subsidy programs and gone directly to auctioning PV subsidy-free, with bids quickly falling,” said WoodMac solar analyst Ben Attia.