Small and large scale solar to reach global grid parity by 2020, says Frost & Sullivan


The convergence of green energy targets, a desire for more energy independence and decentralization, clearer regulatory policy on solar support and continued technical innovation will result in both residential and utility-scale solar PV reaching global grid parity by 2020, according to a report released today by analysts Frost & Sullivan.

Analysis published in the latest Global Solar Power Market – 2016 Update shows that market revenues for solar PV reached $113.75 billion globally last year, and are in line for a compound annual growth rate (CAGR) of 9.5%, reaching $179.13 billion by 2020. Over that time, newly installed PV capacity worldwide will grow from just over 50 GW in 2015 to more than 76 GW a year by 2020 – a CAGR of 8.6%.

Driving this development will be near-universal push for greater energy decentralization, the analysts say, which in turn will prove beneficial for stakeholders of raw materials, solar cell and module manufacturers, BOS suppliers, installers and system integrators, and the general consumer.

Allied to regulatory dynamics and government-sanctioned incentives in many emerging solar markets, the levelized cost of electricity (LCOE) of solar power will be yanked downwards towards grid parity, which should be reached by 2020.

The leading markets of China, Japan and India will continue to snaffle the bulk of Asia’s solar market share, accounting for 80% of all solar installations between now and 2020. Asia as a whole, however, will also expand to account for 64.1% of global market share by that date.

In the U.S., the extension of the investment tax credit (ITC) will nurture consistent and robust growth, certainly up until 2019 and most likely beyond, the report states. By 2020, the North American region will be home to more than 20 million residential solar prosumers, attracted by fiscal incentives such as stronger leasing models, and aided by technological advancements.

Demand for solar is set to be "energized" in Latin America and Africa by continued investments in grid infrastructure, but Europe will continue to decline due to the domino-effect of subsidy withdrawal, huge overcapacity and falling module prices that will make it increasingly difficult for suppliers to turn a profit on the continent.

Frost & Sullivan energy & environment research analyst Pritil Gunjan remarked that the pro-solar incentives and environmental pledges made recently at the COP21 summit in Paris will play a decisive role in ushering solar PV to the front of the energy pack. "Solar will grow exponentially over the next five years," Gunjan said. "Grid integration of renewables and investment in energy storage initiatives are other market enablers."

The analyst also remarked how the large utilities are being compelled to adopt solar PV as reserves of fossil fuels decline, extreme weather variations increase, and distributed generation technologies become more affordable and culturally compatible with modern life. "Utilities will have to seek newer models supporting energy efficiency and energy management initiatives," he said.

"The solar PV supply chain participants are expected to develop new technologies that will lower costs and integrate PV with flexible infrastructure grids. Innovative business models to integrate solar power will also open opportunities in smart metering, demand response and net metering," Gunjan concluded.

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