Solar PV remains 'powerhouse of growth' despite greater commodity prices-- IEA

Dec 1, 2021 04:44 PM ET
  • Global solar PV deployment gets on track to grow by 17% this year despite surging commodity prices raising production costs, according to the International Energy Agency (IEA).
Solar PV remains 'powerhouse of growth' despite greater commodity prices-- IEA
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With utility-scale solar giving the lowest cost of including new electricity capacity in the substantial majority of countries worldwide, especially in the context of boosting gas prices, the IEA expects 156.1 GW of PV to be included around the world in 2021.

While this represents a brand-new record, the figure falls below various other deployment projections, with study organisation BloombergNEF estimating that 191GW of new solar will be mounted this year. By comparison, research study firm IHS Markit is forecasting 171GW of solar installs in 2021 and trade association SolarPower Europe's medium scenario release figure is 163.2 GW.

However, in its yearly Renewables Market Report, released today, the IEA claimed solar PV "stays the powerhouse of growth" in renewable power, driven by stronger assistance from government policies and also even more enthusiastic clean energy objectives introduced at the COP26 Climate Change Conference.

Renewables are set to represent nearly 95% of the rise in global power ability by 2026, with solar PV alone giving more than half, with complete mounted PV capacity expanding from around 894GW this year to 1.826 TW in 2026, according to the report.

Record renewables additions this year are an additional indicator that a new global energy economy is arising, said IEA exec director Fatih Birol. "The high commodity as well as energy prices we are seeing today posture brand-new challenges for the eco-friendly industry, yet raised fossil fuel prices additionally make renewables even more competitive," he claimed.

The IEA additionally offered an increased case, which presumed that federal governments deal with areas such as allowing, grid integration and also absence of remuneration as well as targeted policy support for flexibility. That scenario would see 177.5 GW of solar PV deployed this year.

Despite solar's rise, predicted renewables enhancements are far except what is needed in an international path to internet zero discharges by mid-century. That would certainly need eco-friendly power capability additions in between 2021 and 2026 to average virtually double the rate of the report's major situation.

In the IEA's flagship World Energy Outlook published in October, it was exposed that annual global solar PV additions between 2020 and also 2030 would certainly need to average 422GW in the organisation's net zero by 2050 pathway.

Headwinds from commodity prices

Existing increases in commodity prices have placed upward stress on investment prices, the IEA claimed in its newest report, while the schedule of basic materials and also climbing power prices in some markets position additional difficulties for solar PV manufacturers in the short-term.

Given that the beginning of 2020, prices for PV-grade polysilicon are said to have actually greater than quadrupled, steel has actually enhanced by 50%, aluminium by 80% and copper by 60%. This has actually been intensified by substantial increases in freight fees from China to Europe as well as The United States And Canada, in some cases ten-fold.

The IEA approximated that commodities and also freight prices make up concerning 15% of overall utility-scale solar PV financial investment prices and recommended that the total investment price of utility-scale PV plants can boost by around 25%, based upon a comparison of average commodity prices between 2019 as well as 2021.

While the hike in commodity as well as freights cost has actually already affected contract prices in government-run auctions-- markets such as Spain and also India have seen higher contract prices this year-- the IEA said higher price trends for devices needed for PV plants position an obstacle to designers that won bids in auctions preparing for continual declines in module prices.

Around 100GW of awarded but yet-to-be commissioned solar PV as well as wind capability from 2019 as well as 2021 is at risk of the commodity price shock, possibly causing commissioning delays, according to the IEA.

Nonetheless, commodity price increases are claimed to have had a minimal influence on need for new capacity, with governments making no significant policy changes of cancelling auctions, while business purchasing is on rate to damage an additional year-on-year record.

Although there is a threat of a prolonged period of high commodity prices, the IEA claimed that if commodity and products prices do modest in the near future, the price decrease trend of solar PV would continue as well as the long-lasting impact on the need for the innovation might be minimal.

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