Wood Mac Sees Rapid Growth in PV Slowing Down

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Global solar power installations soared last year relative to 2022 levels, but the pace might not last as planned programs come to an end, according to an analysis from consultant group Wood Mackenzie.

Wood Mackenzie estimates that global installations of photovoltaic (PV) systems increased more than 80% relative to 2022 levels. China, the world's second-largest economy, accounted for most of the new installations, though a slump in prices helped support the broader global momentum.

A late 2023 report from Norwegian energy group Rystad Energy (Oslo, Norway) suggested China's installed solar power capacity could double to 1,000 gigawatts (GW) by the end of 2026. At 392 GW, the country accounted for about one-third of the world's total installed capacity at the end of 2022.

"China's national program to build out solar capacity, launched in June 2021, has led to a significant boost in large-scale projects," said Yicong Zhu, senior renewables and power analyst at Rystad, at the time.

But despite the rise, Wood Mackenzie expects to see a slowdown in installations as many programs come to an end. A pause in new developments is expected while planners chart the next round of deployments, leading to a potential 9% decline in new Chinese installations by 2026.

In broader terms, Wood Mackenzie expects momentum to slow because of limited grid infrastructure, while protectionism could disrupt global supply chains.

"Critical transmission and distribution grid expansions and upgrades remain the biggest limiting factor to more solar growth," the report read.

In Europe, the grid can't keep up with the increase in new capacity. With installations increasing by 60% year-on-year to 2023, the European Union estimates it may need as much as $650 million in annual investments to keep up.

In the U.S. economy, the world's largest, the Energy Information Administration (EIA) said the power sector added 19 GW of new solar power capacity last year, a 27% increase over 2022 levels. Another 36 GW of capacity is expected this year and another 35 GW in 2025.

"With this new capacity, we expect solar will provide 6% of total U.S. electricity generation in 2024 and 7% in 2025, up from a share of 4% in 2023," the EIA's latest monthly market report read.

Billions of dollars in incentives for renewable energy were included in President Joe Biden's signature Inflation Reduction Act, though the domestic industry remains on its backfoot as panel prices collapse.

"The biggest thing that we're looking for is a sense of urgency and a renewed commitment to achieving this goal," Mike Carr, the director of the Solar Energy Manufacturers for America Coalition, told the Reuters news agency. "There's no fundamental reason why we can't have this industry here, but it does take a level of commitment and a willingness to keep the pressure up and respond to changing circumstances."

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