World could add more than 900 GW of solar by 2025 if politicians grasp the nettle – IEA

The world will add almost 107 GW of new solar generation capacity this year, despite the Covid-19 crisis, according to the Renewables 2020 report published this morning by the International Energy Agency (IEA).

The multilateral thinktank has revised up by 18% the bearish prediction it made in May as it digested the huge impact of Covid-19 shutdowns which had afflicted the global economy in the previous quarter. According to the organization's revised assessment, the world will add nearly 117 GW more solar next year with India, France and Germany leading the charge for big solar.

In 2022, Europe and the U.S. will make up for policy uncertainty in China as almost 120 GW of new solar will be added and, for the following three years, 130 GW of photovoltaic generation capacity will be added annually, predicted the IEA.

Best-case

However, if governments around the world can address the various problems afflicting the solar industry – from incentive uncertainty in China to financially devastated utilities in India – more than 120 GW of new generation capacity could be added this year, with more than 142 GW arriving next year, 149 GW in 2022 and then almost 165 GW per year from 2023-25.

The IEA offered up two forecasts in the report, a base case and an ‘accelerated' best-of-all-worlds scenario and predicted solar would account for almost 60% of new clean energy capacity during the five-year period covered by the report, with electricity generation costs from utility scale solar expected to fall 36% during that time. With solar power expected to generate 27% of the world's electricity this year, the IEA expects that figure to rise to a third within five years.

The difference between the two scenarios outlined by the IEA is illustrated by global solar superpower China, where the switch from subsidized to ‘grid-parity' solar has hit demand for the commercial installations that were previously a growth engine for PV in the nation. The world awaits details of solar capacity plans in the forthcoming five-year plan, particularly in the wake of the announcement of a net-zero ambition for 2060.

China

China is expected to add a third more solar generation capacity this year than in 2019, predicted the IEA, including 9-10 GW of residential arrays which will continue to be backed by subsidies until the end of next year. The switch in focus from small systems to utility scale solar plants which has been driven globally by the impact of Covid-19 on household finances is also true of China, where the average 1-5 MW project size reported in the nation's first subsidy auction, last year, almost trebled in this year's procurement round, which allocated almost 26 GW of solar capacity in July.

The IEA report cast doubt, however, on the prospects of the 29 GW of grid-parity projects allocated by the government in July of ever coming to light, given the economic impact of the coronavirus pandemic.

United States

The U.S. which, like China, is expected to see its usual surge of solar project installations in the current quarter, is set to add an “unprecedented” near-17 GW of solar this year and had 13.6 GW of project capacity under construction during the second half of this year, according to the IEA.

The energy thinktank revised its May new-solar forecast for India down 19% and although it anticipates an impressive rebound next year, continuing into 2022, the report made mention of an all-too familiar hurdle for Indian PV ambitions. With the mountain of cash owed by financially-stricken state electric utilities to clean energy developers rising 10% in the first half, the IEA report stated: “A structural solution is needed to ensure the sustainability of discoms [electricity distribution companies], to achieve faster PV growth.”