As more countries join the “gigawatt club,” risks include weak offtaker finances & low price expectations from governments in challenging markets
What will the new decade bring to global solar markets? The boom and bust of 2010s has largely come to an end, with the latter years of the decade seeing a comprehensive shift away from feed-in tariffs towards competitive auctions. Costs will continue to fall in the new decade, though more slowly than before as industry focus shifts away from capex and onto levelized costs. Emerging solar markets will come of age one after another in the 2020s, as Saudi Arabia, Pakistan, Malaysia and more join the “gigawatt club.”
However, new markets also will bring new kinds of challenges for solar. These challenges include the risk of weak offtaker finances leading to power purchase agreement renegotiations (as in South Africa and India) or rock-bottom auction prices (mostly in Gulf Cooperation Council countries) setting unrealistically-low price expectations from governments in more challenging markets.
Transmission and distribution networks will be key
New companies are lining up to enter the grid-connected solar market. The pipeline of development projects is growing by the day and there’s plenty of low-cost finance available.
But a lack of investment in grid infrastructure can hold investors back. Decades of under-investment in grids and burdensome connection processes are putting the brakes on markets around the world. To realize the levels of investment needed to decarbonize power markets, policymakers will need to prioritize the build-out of both transmission and distribution networks.
A new free Wood Mackenzie research insight offers an analysis of global solar industry trends into the 2020s.
Foresight 20/20: Global Solar PV
Source: woodmac
