200 GW Milestone Beckons For Solar Additions in 2022, Cheaper With Extra Storage, Says BNEF

Bloomberg New Energy Finance (BNEF) has predicted that the year 2022 will see the 200 GW milestone in a year for solar crossed for the first time. In 2021, photovoltaic systems with a combined capacity of 183 GW were installed across the globe, a 40 GW jump over 2020. The 2021 figures also came in well over initial estimates of 150 GW additions, thanks to a stronger than expected show in China

BNEF posits that under all circumstances, the 200 GW mark in solar energy will be achieved this year. The key reason for this prediction is the momentum from 2021 especially China. China is expected to add 20 GW in just rooftop and residential solar installations besides commercial and industrial systems as these are becoming more and more profitable against the background of rising electricity prices and electricity shortages in China. The increase in new solar capacity will hover between 81 and 92 GW in China in 2022.

One of the vital reasons for solar expansion throughout the world will be a drop in the prices of modules, after the unexpected rise seen in 2021, that broken an almost decade long trend of falling prices. Polysilicon – the key raw ingredient of the solar PV industry – will witness a rise in its production by 39% as new manufacturing facilities are coming online in China. As a matter of fact, the price has been falling again since October and came down from $37 to $32 per kg by the end of the year. BNEF says that the prices will come to a range of $20 and $25 per kg in the second half of this year. Also, increasing efficiency in the production of large wafers with a size of 210 mm will further contribute to further reducing module prices as larger, higher output modules take a larger share. Thus, module prices are expected to be 11 and 15% lower, reaching $23/24 cents per Watt, as per the agency. Overall production capacities will increase along the entire photovoltaic value chain which is evident from the fact that more than 400 GW annual production capacity of PERC solar cells was achieved by the end of 2021 itself.

Chinese dominance of the solar supply chain is finally set to be challenged too, as new capacities are planned or being added in key markets  like India, the US and Europe. Though manufacturers in these markets will count on both strong domestic demand and possibly some protection as they enter a market that is likely to look oversupplied by 2023.

BNEF also expects solar-plus-storage power plants’ numbers to double in 2022. Be it large markets like the US and China, or many smaller but significant markets, we can already see that storage is, in many ways, the next growth catalyst for solar development. While countries like Australia lead with solar rooftop penetration and now, storage additions, large, more price sensitive markets like India remain well behind, and to that extent, offer considerable scope for  growth and additions with storage in the coming years.