global solar power market (2018 update) · post-2020 will see the market increase to 144.6 gw in...

Global Solar Power Market (2018 Update) Solar Photovoltaic (PV) Gains Momentum as a Globally Irreversible

Mainstream Energy Source

MD5F-14

March 2018

Global Energy and Environment Research Team at Frost & Sullivan

2 MD5F-14

Section Slide Number

Executive Summary 10

� Key Findings 11

� Market Engineering Measurements 12

� CEO’s Perspective 13

� Associated Multimedia and Related Research 14

Market Overview 15

� Market Scope 16

� Regional Scope 17

� Market Definitions 18

� Key Questions this Study will Answer 19

� Market Structure 20

� Market Segmentation by Region 21

� Distribution Channels 22

Drivers and Restraints—Solar Power Market 23

� Drivers and Restraints 24

� Market Drivers 25

Contents

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� Drivers Explained 26

� Market Restraints 29

� Restraints Explained 30

Forecasts and Trends—Solar Power Market 31

� Market Engineering Measurements 32

� Forecast Assumptions 33

� Revenue Forecast 34

� Annual Installed Capacity Forecast 35

� Regulatory Snapshot 36

� Pricing Trends 37

� Pricing Analysis 39

� Financial Trends and Incentives 40

� Technology Analysis 41

� Annual Installed Capacity Forecast by Region 43

� Annual Installed Capacity Forecast by Region Discussion 44

� Revenue Forecast by Region 45

Contents (continued)

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� Revenue Forecast by Region Discussion 46

� Annual Installed Capacity Forecast by Project Type 47

Market Share and Competitive Analysis—Solar Power Market 48

� Competitive Analysis 49

� Competitive Analysis—Market Share 50

� Competitive Environment 51

� Strategic Analysis—Five Forces Model 52

Growth Opportunities and Companies to Action 53

� Growth Opportunity 1—Manufacturing in Different Regions 54

� Growth Opportunity 2—Expand Offerings to Include Residential and C&I Storage 55

� Strategic Imperatives for Success and Growth 56

CEO’s 360 Degree Perspective on the Solar Power Market 57

� CEO’s 360 Degree Perspective 58

North America Analysis 59

� North America—Strategic Insights 60



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� Revenue Forecast Discussion 62


� Annual Installed Capacity Forecast Discussion 64

� Annual Installed Capacity Forecast by Country 65



Europe Analysis 68

� Europe—Strategic Insights 69








Asia-Pacific Analysis 77


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� Asia-Pacific—Strategic Insights 78








China Analysis 86

� China—Strategic Insights 87








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India Analysis 94

� India—Strategic Insights 95







Latin America Analysis 102

� Latin America—Strategic Insights 103








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Africa Analysis 111

� Africa—Strategic Insights 112







Middle East Analysis 119

� Middle East—Strategic Insights 120







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The Last Word 127

� The Last Word—3 Big Predictions 128

� Legal Disclaimer 129

Appendix 130

� List of Exhibits 131

� Market Engineering Methodology 138


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MD5F-14

Executive Summary

11 MD5F-14

Key Findings

• Solar PV is continuing a period of exceptional growth; its annual installed capacity in 2017 was 101.6 GW, almost double

the 51.4 GW installed in 2015. The pace of growth is forecast to slow significantly over the next few years, but growth

post-2020 will see the market increase to 144.6 GW in 2025.

• China is a big part of the growth story and annual installations are forecast to average 55 GW between 2018 and 2025.

India is another market registering strong growth—from just 2 GW installed in 2015, it is expected to install 17.8 GW by

2025. A key driver in both markets is the goal to try and limit carbon emissions and pollution, which is an increasingly

important domestic political issue in both countries.

• Projects costs have continued to fall, declining by 20% in 2017, driven by lower module and inverter prices, but also by

reductions in non-core equipment and project costs. China and India are key regions for reductions, but falls have been

seen across all markets. Cost reductions going forward in the future will continue, but at a much slower rate.

• North American project costs are likely to increase due to the introduction of tariffs on Chinese modules, which will cause

the market to slow; 12 GW was installed in 2017, a reduction from the 15 GW peak in 2016. The market is forecast to

decline to 9.4 GW in 2020, but will recover to 16 GW in 2025 as module costs are again lowered and the economics of

solar PV continue to improve. Some federal incentives remain and solar power still retains support in several US states.

• The European market has started to recover from the 6.7 GW low in 2016 (the lowest in Europe for a decade). 8 GW

was installed in 2017 and this is forecast to increase to 16.4 GW by 2025. The commercial, industrial and residential

markets will see the fastest growth rates, driven by cost reductions and market changes that are making solar power

increasingly competitive in the post-feed-in tariff era.

Source: Frost & Sullivan

12 MD5F-14

Market Engineering Measurements

Market Overview

For a tabular version, click here Stable Increasing Decreasing g

Market Stage

Growth

Annual Installed Capacity

101,620 MW

(2017)

Market Revenue

$121.49 billion

(2017)

Annual Installed Capacity for Last Year of Study Period

144,590 MW

(2025)

Market Revenue for Last Year of Study Period

$139.03

billion

(2025)

n

Base Year Market Growth Rate for Revenue

Compound Annual Growth Rate for Annual Installed Capacity

4.5%

Base Year Market Growth Rate for Annual Installed Capacity

32.8 %

Compound Annual Growth Rate for Revenue

1.7% 10.8%

Market Concentration (Per Cent of Market Share Held by Top 3 Companies) Companies)

24.0%

Note: All figures are rounded. The base year is 2017. Source: Frost & Sullivan

(2017) (CAGR, 2017–2025) (2017) (CAGR, 2017–2025)

Solar Power Market: Market Engineering Measurements, Global, 2017

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CEO’s Perspective

2 Consolidation in the sector will continue. Solar energy is a volume manufacturing business, and the opportunities for niche participants are narrowing, unless they operate in a protected domestic market.

3 The North American market faces headwinds, but the fundamentals of solar power in the United States are strong and the market will recover.

4 Economies of scale and technological innovation enabling greater automation in manufacturing will continue to reduce component prices and the cost of installation.

5 Solar PV and storage will be an increasingly attractive proposition as battery system costs decline further and regulatory support increases.

1

The widespread use of feed-in tariffs has ended, but there are incentives and regulations in certain markets to support solar power. Reducing lifecycle costs, particularly in operations and maintenance (O&M) will become increasingly important.


14 MD5F-14

Associated Multimedia and Related Research

Follow Frost & Sullivan’s Future of Energy blog

• Market Outlook: Global Power Industry Outlook, 2018 (upcoming)

• Market Outlook: Global Energy Storage Industry Outlook, 2017

• Market Research: Global Solar Power Market Outlook, 2016

• Market Research: Asia-Pacific Rooftop Solar Power Market, Forecast to 2020

• Insight: Electricity Industry Profiles: Germany, Austria, Switzerland

• Insight: Turkish Solar Power Market

• Insight: The State of Flexible Solar Cells

• Insight: Third-generation Solar Photovoltaics - Future Technology TOE


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MD5F-14

Market Overview

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Market Scope

Geographic Coverage Global

Study Period 2015–2025

Base Year 2017

Forecast Period 2018–2025

Monetary Unit Dollar

Conversion Rate €1.00 = $1.11

Residential

Commercial & Industrial

Utility

PNorth America

Europe

Asia-Pacific (APAC)

China

India

Latin America

Africa

Middle East

P

Project Type Regions

PIn scope

P

P

P

P

P

P

P

P

P

• The scope of this study includes the global market for solar power. However, only the solar PV market was analyzed because a separate study on the global concentrated solar power (CSP) market will be published by Frost & Sullivan.

• This study includes an in-depth analysis of the solar power market with a specific focus on regions and end users. Application and technology are covered at a global perspective. This research service provides the description and analysis of the global solar power market at the top-level, as well as the regional market level.


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Regional Scope

North America

Latin America

Asia-Pacific

Europe

This includes the United States and Canada.

This includes Central Asia, East Asia, and the CIS states in Asia, Australia, and Oceania.

This includes the European Union, the Commonwealth of Independent States (CIS), Russia, and the Caucasian Republics.

This includes the South American continent, Mexico, and the Caribbean islands.

This includes the African continent and the greater Middle East area, comprising the Persian Gulf states, Lebanon, Jordan, Syria, Israel, Turkey, Iraq, and Iran.

Africa and Middle East

India

China


Solar Power Market: Regional Scope, Global, 2017

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Market Definitions

• Solar energy has been defined as the easiest and cleanest source of renewable energy that can be

either directly harnessed from the sun’s radiation to generate electricity or can be indirectly converted

into energy with the help of other renewable technologies such as wind, hydropower, and biomass.

• The term “photovoltaic” (PV) is derived from the Greek word “photon” meaning light and “voltaic”

meaning electric current produced by chemical action. Hence, photovoltaic is the process of converting

solar energy into electricity.

• A PV system can be manufactured with the help of PV arrays made up of semiconductor PV cells.

Sunlight is absorbed by these semiconductor cells to generate electricity.

• An entire PV system comprises various types of PV cells interconnected to a form of PV modules,

batteries, inverters, charge controllers, control components, and mounting frames. Crystalline technology

is dominating the global solar power market accounting for more than 90% of the market share.

Image Source: Frost & Sullivan Image bank Source: Frost & Sullivan

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Key Questions this Study will Answer

Is the global solar power market growing; how long will it continue to grow, and at what rate?

Are existing competitors structured correctly to meet customer needs?

Will these companies, products, and applications continue to exist?

What are the key drivers and restraints affecting the solar power market?

Are the technologies offered today meeting customer needs or is additional development needed?

How are the growth trends for solar power different in developed and developing markets?


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Market Structure

The most prevalent material in solar PV is solar-grade silicon in the form of ingots, wafers, or ribbon. Prices of silicon have declined dramatically in recent years, affecting manufacturers’ profits. Leading suppliers include China’s GCL and LDK,

Korea’s OCI, US-based Hemlock, and Germany’s Wacker.

Cell manufacturing is dominated by Chinese and Taiwanese firms. Most companies’

manufacturing cells also produce modules. China has been increasingly importing solar cells from neighbouring countries to circumvent US trade sanctions.

To gain more control over the supply chain, most cell/module producers provide end-to-end solutions through a vertical integration strategy. Many integrated suppliers in China will shut down because the glut in supply will result in their factories being underutilised.

Balance of system equipment suppliers refers to all other associated equipment manufacturers and suppliers in a PV system. The main components include inverters, charge controllers, and batteries.

This is the most fragmented segment in the solar PV industry. Unlike the more upstream segments, it has remained highly profitable, benefitting from low-cost supplies and growing end-user demand as a result of falling costs.

Raw Material Suppliers

Solar Cell Manufacturers

Solar Module Manufacturers

Balance of System Equipment Suppliers

System Integrator/ Installer


Solar Power Market: Market Structure, Global, 2017

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Market Segmentation by Region

Key Takeaway: The sheer volume of capacity being installed in China means it accounted for 39.6% of global solar power market revenue, despite having the lowest per MW cost.


North America 14.6%

Europe 9.0%

Asia-Pacific 20.4% China

39.6%

India 5.7%

Latin America

4.3%

Africa 5.2%

Middle East 1.3%

• 2017 was a record breaking year for the solar industry, with revenue of $139.03 billion, eclipsing the $109.66 billion in 2016.

• The continued decline in the cost of solar PV technology and environmental concerns continue to drive investment.

• The Chinese market was worth $48.12 billion in 2017, an increase of 44.5% from the $33.31 billion recorded in 2016.

• The APAC region (including both China and India) comprised 65.7% of the solar market in terms of revenue.

• Europe’s solar market revenue increased to

$10.94 billion in 2017 after sharp declines in 2016 (revenue fell from $14.92 billion in 2015 to $9.92 billion in 2016).

Solar Power Market: Per cent of Revenue by Region, Global, 2017

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Distribution Channels

Key: EPC = Engineering, Procurement, and Construction

Solar PV Cell/Module Manufacturers

End User

Company-owned Dealers/Distributors

Independent Accredited Installers

Agents

Partners Direct Sales

Superstores

EPC Sales 30%

10%

25%

10%

5%

5%

15%


Solar Power Market: Distribution Channel Analysis, Global, 2017

Key Takeaway: Manufacturers need to utilize a multi-channel approach to effectively target the market.

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MD5F-14

Drivers and Restraints—Solar Power Market

24 MD5F-14

Drivers and RestraintsD

rivers

R

estr

ain

ts

Dri

vers

R

estr

ain

ts

Cost reduction of solar modules

increases competitiveness

Recent regulations and policies support

continued growth

Reductions in subsidies and tariffs creates challenges

for solar power

Threat of solar module tariffs in the United

States and India

Denotes long-term impact

Denotes current impact

DenD

Den

Financial support from government including

feed-in tariff and subsidies fuel demand

for solar power

Growing focus on R&D investment

makes solar power more attractive

Massive drive by China helps

diversify its energy mix

Continued decline of battery storage costs drives investment in

solar PV–storage solutions


Solar Power Market: Key Market Drivers and Restraints, Global, 2018–2025

Key Takeaway: Policies, price declines, and environmental awareness pushes market growth.

25 MD5F-14

Market Drivers

Drivers 1–2 Years 3–4 Years 5–8 Years

Cost reduction of solar modules increases competitiveness

H H H

Massive drive by China helps diversify its energy mix

H H M

Recent regulations and policies support continued growth

H H M

Financial support from the government including feed-in tariff and subsidies fuel demand for solar power

M M L

Continued decline of battery storage costs drives investment in solar PV–storage solutions

L L M

Growing focus on R&D investment makes solar power more attractive

L L M

Impact Ratings: H = High, M = Medium, L = Low Source: Frost & Sullivan

Solar Power Market: Key Market Drivers, Global, 2018–2025

26 MD5F-14

Drivers Explained

Cost reduction of Solar Modules Increases Competitiveness

• The cost of solar modules has declined by 40% between 2010 to 2016, and is forecast to decline by a further 15%–20%

between 2017 and 2025. Economies of scale, technological advancement, and increasing automation in production are key

forces behind the price reduction in solar modules. In the United Arab Emirates, a 25-year a solar power supply contract was

awarded for $2.4 cents/kwh in September 2017. It should be noted that this contract and others in the region may not reflect

the total cost of construction and operation, as concessions within the contract over land and other costs are likely.

• There are potential challenges ahead concerning trade disagreements related to modules (see restraints), but overall costs

in the global market are forecast to continue declining, as further savings are made for minimizing the costs of other

components including inverters and balance of plant costs.

Massive Drive by China Helps Diversify its Energy Mix

• The Chinese end-market is comprising a large part of global demand. The Chinese solar power market accounts for 50% of

the global market. The Chinese government is having a massive push to diversify its energy mix. Government support can

be either through funds, subsidies, or incentives. The government is also promoting investment in solar capacity as a way of

diversifying away from coal. There have also been new incentives announced to make it easier for commercial, industrial,

and residential customers to sell excess power into the market.

• China-based solar manufacturers came to dominate the global market for solar modules and the government is also keen to

support local OEMs.


27 MD5F-14

Drivers Explained (continued)


Recent Regulations and Policies Support Continued Growth

• Stable policy is one of the main drivers for solar PV growth. Global agenda for renewable and clean energy sources pave the

way for the development of solar power. The International Solar Alliance was launched for the purpose of boosting solar

energy in developing countries and is supported by 120 countries.

• Policies linked to the implementation of the Paris Agreement are driving solar power growth, particularly in developing

markets.

• A global policy for climate change addressing carbon-emission cost will accelerate PV growth. The U.N. Framework

Convention on Climate Change (UNFCCC) set the goal of keeping average warming below 2 degrees Celsius. Asia is a

main focus where energy demand grows exponentially; however, coal is seen as a main source of electricity. The primary

target is to shift from high-carbon energy sources to renewable alternatives.

Financial Support from Government Including Feed-in Tariff and Subsidies Fuel Demand for Solar

Power

• Solar PV remains a policy-and regulations-driven business, where political decisions influence the potential market off-take

considerably. For small-scale solar PV, developers rushed to finalize the PV projects to benefit from feed-in tariffs, which is to

be reduced in some countries. Policies for utility scale, renewable projects are mainly supported by competitive auction and

tender schemes with long-term power purchasing contracts. It ensures cost-effective deployment of solar PV systems

through competitive pricing. 2017 was a continuation of a low, record breaking year in solar energy auctions.

• New business models promoting the use of solar energy by promising new ways of financing is spreading beyond developed

markets such as the United States and Europe and affects Africa and Asia. Long-term contracts such as solar power leasing

programs and power purchase agreements (PPA), provide investors with the opportunity of reducing cost and risk by using

clean energy.

28 MD5F-14

Drivers Explained (continued)


Continued Decline of Battery Storage Costs Drives Investment in Solar PV–storage Solutions

• The continued price decrease in battery storage technologies and more flexible and accurate demand response systems will

boost demand for PV-storage solutions.

Growing Focus on R&D Investment Makes Solar Power More Attractive

• There is an ongoing investment in R&D to make solar power more efficient and also financially viable. Technology

improvements, which lead to higher energy efficiency, increased reliability of solar cells, low-cost materials, and better

methods of energy storage, have considerably reduced the cost of solar PV systems.

• In the United States, Germany, China and India put significant effort in technological advances in solar power to drive down

the cost of manufacturing. Countries are systematically restructuring government support for solar power R&D to make it

more effective and efficient.

29 MD5F-14

Market Restraints

Restraints 1–2 Years 3–4 Years 5–8 Years

Reductions in subsidies and tariffs create challenges for solar power

H M M

Threat of solar module tariffs in the United States and India

H M L

Impact Ratings: H = High, M = Medium, L = Low Source: Frost & Sullivan

Solar Power Market: Key Market Restraints, Global, 2018–2025

30 MD5F-14

Restraints Explained


Reductions in Subsidies and Tariffs Creates Challenges for Solar Power

• Solar power is highly reliant on government support. FiTs, tax benefits, rebate programs, and fund allocations are regarded

as the key drivers of market growth. Therefore, the cut in incentive programs reduces the growth potential of solar PV.

Especially in developing countries, policy support can reduce the cost of system financing and

operational risks.

• The market suffers a setback if there is a withdrawal of subsidies or incentives. For instance, Japan is reducing FiT support

regularly; this resulted in a nearly 15% decline in solar PV demand. Demand in Europe and Japan remained relatively low

unlike previous years, as subsidies were cut. Numerous lawsuits against retrospective and retroactive changes across

European countries such as Spain and Italy are still ongoing.

Threat of Solar Module Tariffs in the United States and India

• China’s dominance in the global solar power market is starting to face a regulatory challenge. US manufacturers have

brought a case to the US International Trade Commission, which made a recommendation to President Trump calling for

tariff quotas to be placed on Chinese modules. Several recommendations were made, and President Trump opted for a 30%

tariff in year one, declining by 5% per year over 4 years. The tariff allows 2.5 GW to be imported tariff free each year.

• India is considering a 7.5% tax on imported modules as part of a package of measures to boost domestic manufacturing.

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MD5F-14

Forecasts and Trends—Solar Power Market

32 MD5F-14

Market Engineering Measurements

Market Overview

Trend Decreasing Stable Increasing

▼ StableStable

● ▲

Measurement Name Measurement Trend

Market Stage Growth –

Market Revenue (2017) $121.49 billion ▲

Annual Installed Capacity (2017) 101,620 MW ▲

Market Revenue for Last Year of Study Period (2025) $139.03 billion ▲

Annual Installed Capacity for Last Year of Study Period (2025) 144,590 MW ▲

Base Year Market Growth Rate for Annual Installed Capacity (2017) 32.8% ▲

Compound Annual Growth Rate for Annual Installed Capacity, (CAGR, 2017–2025) 4.5% –

Base Year Market Growth Rate for Revenue (2017) 10.8% ▼

Compound Annual Growth Rate for Revenue, (CAGR, 2017–2025) 1.7% –

Market Concentration (Per cent of Market Share Held By Top 3 Companies) 24.0% ▼


Solar Power Market: Market Engineering Measurements, Global, 2017

33 MD5F-14

Forecast Assumptions

• For the purpose of estimating market size and growth, this study includes secondary and primary research information and interviews from top industry participants.

• Forecasts for the demand for solar PV end-users, regions, and application segments have been made after conducting a thorough analysis of market trends.

• This study is a strategic overview of the global solar power market, and it follows the principle of Frost & Sullivan's market engineering research methodology.

• This is a measurement-based system of market measurement, analysis, forecasting, strategy development, and monitoring.

• Global solar power revenue forecasts have been considered only for solar PV units.

• Market drivers and restraints have been built into the forecasting model to estimate revenue growth rates and market size figures.

Data Sources

Forecast Coverage

Forecast Assumption

Source: Frost & Sullivan imagebank

34 MD5F-14

Revenue Forecast

(20.0)

0.0

20.0

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Revenue 102.1 109.6 121.4 135.7 126.5 118.6 122.4 122.3 127.1 130.9 139.0

Growth Rate 3.1 7.4 10.8 11.7 (6.8) (6.2) 3.2 (0.1) 3.9 3.0 6.2

Gro

wth

Rate

(%

)

Reve

nu

e (

$ B

illi

on

)

Year


Key Takeaway: Globally, solar power market revenue will decline in the next 2 years principally due to the continued decline in project costs.

Solar Power Market: Revenue Forecast, Global, 2015–2025

CAGR, 2017–2025 = 1.7%

35 MD5F-14

Annual Installed Capacity Forecast

(10)

0

10

20

30

40

50

60

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

AnnualInstalled Capacity

51,376 76,500 101,620 114,368 111,250 109,901 116,044 118,721 126,091 133,694 144,590

Growth Rate 26.2 48.9 32.8 12.5 (2.7) (1.2) 5.6 2.3 6.2 6.0 8.1

Gro

wth

Rate

(%

)

An

nu

al

Insta

lled

Cap

acit

y (

MW

)

Year


Key Takeaway: Lower costs and the desire to minimize emissions will drive the market to 2025.

Solar Power Market: Annual Installed Capacity Forecast, Global, 2015–2025

CAGR, 2017–2025 = 4.5%

36 MD5F-14

Regulatory Snapshot


Africa: Long-term PPAs and attractive feed-in tariffs are set by the regulatory authorities in Africa. Ambitious targets have been set by Morocco and Tunisia, for instance, to reduce the impact of climate change.

APAC: Asian governments have initiated supportive policies to support solar power to curb greenhouse and carbon-dioxide emissions. Japan is planning to revise its FiT policy and terminate its Green Investment Tax credits to spur solar power growth.

Europe: The high initial investment cost is one of the barriers for solar development in Europe. Self consumption and Power Purchase Agreement models are core business models to be adopted to drive demand in Europe.

North America: There are several policies initiated in North America regarding climate change such as the AB2188, which aims to reduce solar PV set-up costs. Besides this, the Federal Tax Credit allowing US states to recoup 30% of its equipment and installation costs for an unlimited amount, has been scaled back.

Latin America: Governments have started using market forces to maximize the use of solar power potential of Latin America.

Middle East: Jordan is the first country introducing an FiT system for net metering in the Middle East. Considering the development of rooftop solar PV, governments need to have substantial policies to promote solar energy.

India: The Ministry of New and Renewable Energy (MNRE) proposed 7.5 GW solar power by 2022 to support domestic manufacturers during the second phase of its Central Public-Sector Unit (CPSU) program.

Solar Power Market: Regulatory Snapshot, Global, 2017

37 MD5F-14

Pricing Trends

Source: www.statista.com; Frost & Sullivan

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

201

5

201

6

201

7

201

8

201

9

202

0

2021

202

2

202

3

202

4

202

5

Pri

ce

Pe

r P

ea

k W

att

($)

PV Modules Utility-Scale Systems

Residential Systems

• Solar PV has traditionally been seen as an attractive class of assets with stable returns and low risk.

• The price of silicon and manufacturing scale economies will further decrease the price of solar PV modules to reach $0.34 per peak watt by 2025.

• The forecast slowdown in solar price reductions after 2020 was mainly driven by solar module manufacturers’ consolidating margins after a

period of manufacturing overcapacity and severe competitive pressures on the market.

• There is still uncertainty over pricing in the United States, with a decision expected in early 2018 on the introduction of solar tariffs that will lead to price increases. However, these tariffs are likely to be gradually scaled back and the mid-to-long-term trend is for prices there to continue declining.

Total Solar Power Market: Price Trends, Global, 2015–2025

38 MD5F-14

Pricing Trends (continued)

North America Europe Asia-Pacific China India Latin

America Africa Middle East

2017 2025 2017 2025 2017 2025 2017 2025 2017 2025 2017 2025 2017 2025 2017 2025

Resid

en

tial

USD/W 2.80 2.32 1.74 1.28 2.62 2.0 1.18 1.0 1.16 0.97 2.75 2.09 4.60 2.48 4.10 1.99

CAGR (2.3%) (3.8%) (3.3%) (2.0%) (2.2%) (3.4%) (7.4%) (8.6%)

Co

mm

erc

ial&

In

du

str

ial

USD/W 1.85 1.53 1.36 1.02 2.41 1.86 1.13 0.88 1.15 0.83 2.20 1.53 4.15 2.25 4.15 2.25

CAGR (2.3%) (3.5%) (3.2%) (3.1% (4.0%) (4.4%) (7.4%) (7.4%)

Uti

lity

Scale

USD/W 1.02 0.84 1.11 0.83 1.92 1.57 0.83 0.59 0.65 0.46 1.10 0.83 1.60 0.95 1.60 0.95

CAGR (2.4%) (3.6%) (2.5%) (4.2%) (4.2%) (3.5%) (6.3%) (6.3%)


Solar Power Market: Regional Pricing Forecasts, Global, 2017

39 MD5F-14

Pricing Analysis

Component

Per cent of

Overall Capital

Costs Trend

PV module/panels

40–45% ▼

Inverters 20–35% ▼

Mounting Frame

8–12% ●

Balance of Systems

6–8% ▲

Planning and Installation

10–20% ▲

• The major trend in solar power pricing has been that

core equipment costs have been declining faster

than any other cost element.

• This is reflected by the declining share of PV

modules and inverters as a percentage of total

costs.

• PV modules still comprise the highest share of the

cost of a solar PV system. It was approximately

50% of the cost in 2010, but has decreased to

account for 40%-45% of the cost in 2017.

• Chinese manufacturers have continued to be

aggressive on pricing and is a key reason behind

the cost declines for both modules and inverters.

• As a percentage, balance of system costs and

planning and installation costs have increased,

although overall costs for both of these have

declined in real terms. Trend Decreasing Stable Increasing

▼ StableStable

● ▲


Solar Power Market: Price Component Structure, Global, 2017

40 MD5F-14

Solar Lease Power Purchase Agreement (PPA)

• Solar-lease program is spreading beyond the United States, Europe and China, but it is used in Asia-Pacific and Africa.

• It is a legal contract helping to bridge investors and end users of decentralized solar PV. It is an efficient way to reduce electricity bills, maintenance costs, and the financial and operational risk of owning a solar PV system.

• A typical solar lease is based on monthly payment, and lasts anywhere between 5 and 25 years. By the end of the contract, homeowners have the opportunity of renewing the contract, purchasing the system, or having the equipment removed.

• A PPA is a long-term (10-25 years) legal contract in which a homeowner agrees to purchase electricity at a fixed rate lower than utility retail price from a system provider without paying any upfront cost for system sizing or installing.

• The solar PV system provider receives the revenue generated from selling excess electricity to the grid and tax credit or incentives as well. Besides, the company assumes all risks and responsibilities associated with owning the system (O&M services, part replacement)

• Through a power purchase agreement, the solar power providers install solar panels on the owner’s rooftop and sells the homeowner the energy produced by the panels produce at a fixed rate.

Image Source: Natural News. Source: Frost & Sullivan

Solar Power Market: Financial Incentives, Global, 2017

Financial Trends and Incentives

41 MD5F-14

Maturity Development Growth Decline

Dye-sensitised solar cell (DSSC)

Mark

et

Pe

netr

ati

on

an

d C

om

merc

iali

sati

on

Organic Cell

Hybrid HIT Cell

2nd Generation PV (thin-film based)

1st Generation PV (crystalline based)

Third-generation solar cells are at the development phase. It aims to achieve high efficiency but still uses thin film and second-generation deposition methods and can reach 20–22% efficiency in lab. This should be done with only a small increase in area costs. Third-generation PV is not widely used in stable market products.

tion PV eratbased)m ba )

Thin-film solar technologies primarily use compound semiconductor materials including copper, cadmium, and tellurium to create PV cells. Second-generation solar cells are more expensive than first-generation solar cells but potentially less expensive in terms of manufacturing in the near future. In terms of efficiency, thin film reached 22–25% in labs. They are effective under low-light conditions as well.

V d)

First-generation solar cells also called crystalline-based solar cells dominate the commercial market because they have higher efficiencies ranging from 15–25%; they are also cheaper, reliable, tested, and proven over the years.

Dye- ensitisedseell (DSSCce

Organic Cell

Hybrid HIT Cell

d solar C)

3rd Generation PV

Time


Solar Power Market: Solar PV Technology Curve, Global, 2017

Technology Analysis

42 MD5F-14

Technology Analysis (continued)

1st Generation

2nd Generation

3rd Generation

Solar Photovoltaic Technologies

Effic

ien

cy

Poly Crystalline (Multi c-Si)

Cadmium Telluride (CdTe)

Hybrid HIT Cells

Mono Crystalline (Mono c-Si)

Amorphous Silicone (a-Si)

Copper Indium Diselenide (CIS)

Micromorphous/Multi Junction

Organic Cells

Dye-sensitised Cells

Nanotech-based Cells

10–15%

8–15%

3–8%

14–20%

5–10%

10–12%

9–11%

2–5%

4–10%

5–10%

Crystalline Silicon

Thin Film Solar

New Technology


Solar Power Market: Major Solar PV Technologies, Global, 2017

43 MD5F-14

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Middle East 455 387 710 1,260 1,864 1,205 1,370 1,960 2,328 2,445 2,350

Africa 750 838 2,910 3,290 3,910 3,820 3,975 3,950 4,050 3,610 3,420

Latin America 1,889 2,265 4,060 5,636 6,829 7,948 8,544 8,661 8,813 8,754 8,685

India 2,000 4,500 9,700 11,550 12,200 13,680 15,060 16,240 16,880 17,250 17,750

China 15,100 34,500 53,000 60,000 55,000 52,000 50,000 48,000 52,000 57,000 65,000

Asia-Pacific 14,482 12,270 11,200 11,205 10,430 10,500 10,760 10,870 11,755 13,170 14,230

Europe 8,600 6,740 7,990 10,618 10,817 11,298 14,135 15,440 15,390 15,315 16,455

North America 8,100 15,000 12,050 10,810 10,200 9,450 12,200 13,600 14,875 16,150 16,700

An

nu

al

Ins

tall

ed

C

ap

ac

ity (

MW

)

Year


Key Takeaway: China is the largest contributor and is expected to add almost 439.0 GW of total solar capacity between 2018 to 2025.

Solar Power Market: Annual Installed Capacity Forecast by Region, Global, 2015–2025

Annual Installed Capacity Forecast by Region

44 MD5F-14

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2017 2025

Middle East 710 2,350

Africa 2,910 3,420

Latin America 4,060 8,685

India 9,700 17,750

China 53,000 65,000

Asia-Pacific 11,200 14,230

Europe 7,990 16,455

North America 12,050 16,700

An

nu

al

Ins

tall

ed

C

ap

ac

ity (

MW

)

• The global solar market has experienced a boom two years in a row—in terms of capacity additions in 2016 and 2017 by recording 48.9% and 32.8% growth rate, which is almost double from the previous year.

• Total cumulative solar PV installed capacity reached 411.0 GW by the end of 2017, however, it generates approximately 3% of global electricity demand. In 2025, it is forecast that cumulative capacity will reach 1,385.7 GW.

• Although Europe did not perform well in 2016, it started recovering in 2017 and its contribution to the global solar market will steadily increase over the years. Turkey will become one of the key European countries besides Germany, the United Kingdom, Italy, and France.

• Global PV market is clearly dominated by China connecting 53 GW to the grid. An expected reduction in feed-in-tariffs drove investment in 2017 and will continue to drive the market in 2018.

• Investment in energy storage solutions will support solar market growth post 2020.


Solar Power Market: Annual Installed Capacity Forecast by Region,

Global, 2017 and 2025

Annual Installed Capacity Forecast by Region Discussion

45 MD5F-14

Year

0

20

40

60

80

100

120

140

160

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Middle East 1.57 1.04 1.52 2.61 3.27 2.02 2.06 2.50 2.80 2.87 2.81

Africa 3.15 2.76 6.28 6.74 7.10 6.39 6.06 5.53 5.53 4.89 4.73

Latin America 3.59 3.03 5.18 6.75 7.82 8.95 9.44 9.43 9.82 9.56 9.60

India 2.32 3.81 6.94 7.83 8.11 8.82 9.33 9.98 10.24 10.38 10.31

China 17.43 33.31 48.12 55.38 49.01 43.90 40.48 38.06 40.15 42.93 48.43

Asia Pacific 40.87 29.65 24.79 24.32 21.74 20.95 21.23 20.80 21.97 23.11 24.87

Europe 14.92 9.93 10.94 13.38 12.70 12.82 15.37 16.22 15.54 15.19 16.40

North America 18.30 26.12 17.71 18.73 16.78 14.78 18.47 19.86 21.07 22.04 21.88

Reve

nu

e (

$ B

illi

on

)


Key Takeaway: The highest revenue growth rates are from emerging markets.

Solar Power Market: Revenue Forecast by Region, Global, 2015–2025

Revenue Forecast by Region

46 MD5F-14

020406080

100120140160

2017 2025

Middle East 1.52 2.81

Africa 6.28 4.73

Latin America 5.18 9.60

India 6.94 10.31

China 48.12 48.43

Asia-Pacific 24.79 24.87

Europe 10.94 16.40

North America 17.71 21.88

Reve

nu

e (

$ B

illi

on

)

Year

• Market revenue for solar PV globally is expected to increase from $121.49 billion in 2017 to $139.03 billon in 2025, as cost per GW continues to decline.

• Coal and nuclear power remain the cheapest base load power sources globally, but utility-scale solar power is reaching the grid level and becoming competitive with coal and nuclear power. While China is the largest contributor with almost $48.12 billion in 2017, its market share is likely to decrease from 39.6% in 2017 to 34.8% in 2025 largely because of modestly lower demand, declines in per MW system costs, and increases in other regions.

• Despite significant restraining factors, such as lack of financial support and underdeveloped grid infrastructure, the Middle East will increase its market share. The cost of generating electricity from solar PV, will continue to remain high unless supported by adequate government subsidies in these regions.


Solar Power Market: Revenue Forecast by Region, Global, 2017 and 2025

Revenue Forecast by Region Discussion

47 MD5F-14

Year

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Utility Scale 33,202 54,343 73,287 67,243 66,379 66,906 70,796 72,083 75,434 79,017 84,489

Commercial & Industrial 6,991 8,528 12,184 24,820 23,683 22,758 23,849 24,537 26,604 28,553 31,524

Residential 11,183 13,629 16,148 22,306 21,188 20,237 21,399 22,101 24,053 26,124 28,577

An

nu

al

Insta

lled

Cap

acit

y (

MW

)


Key Takeaway: Although the utility segment will dominate in terms of overall capacity additions during the forecast period, battery storage and self consumption will drive growth in the commercial and

residential segment.

Solar Power Market: Annual Installed Capacity Forecast by Project Type, Global, 2015–2025

Annual Installed Capacity Forecast by Project Type

global solar power market (2018 update) · post-2020 will see the market increase to 144.6 gw in...

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