Global trends are driving this shift: in particular, new markets’ urgent need for energy, combined with technological advances that have made solar attractive to early suppliers and investors. Such investments are now bearing fruit in every far-reaching corner of the globe.
Deloitte defines this success in a simple equation: enabling trends + demand trends = energy of choice. The enabling trends consist of new and more accessible technologies, reducing pricing across key markets; while the demand trends have come from increasing emerging market investment, as well as increasing urbanization in developing markets. With the majority of the population now living in cities, national movements to create competitive, sustainable, and quality living environments have been on the rise, with renewable energy sources playing a key role.
For us, although I agree with that analysis, it’s even simpler: solar energy has been the most lucrative and sensible energy choice since its inception. The difference now is the markets it serves – both in terms of requirements and circumstance.
Developments in new markets – what some would term ‘emerging markets’ – have played a major role in making solar such an attractive option. By 2016, new markets had leap-frogged mature markets, such as the United States and Germany, in both wind and solar growth and in 2017, accounted for 63% of new investment in renewables. Advances in technology, resulting in greater performance at lower costs, have garnered the attention of private and government investors in the developing world. What these advances have simply done is allow solar to achieve what it’s always been capable of achieving, but in places that need it most.
This has been helped by the desire in new markets to drive innovation, which has lifted massive nations to the top of the pile for solar energy supply and consumption. China, India, Mexico, UAE, and other major players outside the traditionally mature markets are collectively steering renewable innovation and growth for the developing world. Off-grid microgrids have now found their way to developing markets, too. This intersection between new and mature markets is aggressively driving solar growth, and long may it continue.
The increasing role of technology
Improved battery storage has changed the way we can utilize the energy generated by PV systems during daytime, broadening its application. Through such developments to distributed power generation, big cities in new markets can better plan how to meet their energy demands around a sustainable, affordable source, producing and storing power in their own backyard.
Rapid innovation in industries like IT have also been major drivers of this growth, with automation and artificial intelligence (AI) helping to improve efficiency and performance of renewables. For example, with AI learning, forecasting weather trends can help optimize supply of energy. On a cloudy day, the supply of solar would decrease, but demand may increase, depending on temperature and location. Through machine learning, AI systems can create accurate trends to respond to these demands.
Leading global energy performer
All things considered, since the start of 2017, solar has outperformed all other energy generating technologies, deploying significant GWs of energy around the world. In fact, we installed around 100 GW of solar energy globally as an industry in 2018 alone. New markets are driving this growth. To give an example, record-breaking bids in Saudi Arabia helped reduce tariff rates to their lowest, further increasing the attractiveness of solar investment.
More ambitious renewables targets set in major markets put solar in the spotlight once more in 2018, with India, Pakistan, and a number of CIS and West Asian countries laying roadmaps that could take the world to 1TW of solar generation by 2022.
The Middle East and North Africa is also having its say, with both Saudi Arabia and Egypt predicted to achieve more than 100% annual growth rates between now and 2022, at 227 and 171 percent, respectfully, according to SolarPower Europe’s Global Market Outlook.
This reinforces my belief that we need to focus on maintaining the momentum gained so far. Pricing, performance, and responsible policy-making have been some of the key drivers of solar development in emerging economies.
These markets now have stronger global case studies, thanks to places like India, which has rocketed to the third strongest PV market worldwide in an incredibly short time. The potential for new markets is believed to be more than 200 GW in the next half decade.
Simply put, new markets are driving the development of the global solar energy industry. The past years have proven the inherent characteristics that make solar so adaptable and attractive – particularly to the developing world. With growing maturity around sustainability, environmental policy, and affordable energy for all, solar has shone brightest as the most versatile and customizable technology for needy markets all over the world.
About the author
Martin Haupts founded Phanes Group in 2012, with a distinct focus on renewable energy and emerging markets. Since then, he has orchestrated the company’s transition from an advisory-focused firm to an integrated solar developer and investment manager with a transaction volume exceeding US$250 million by 2016.
With 17 years in asset management and infrastructure finance, Martin has a wealth of experience in commercial and legal structuring in the cleantech industry and expertise in Islamic Finance. He was Global COO for Products and Solutions at Credit Suisse Asset Management in London and Zurich. In the UAE, Martin was Head of Asset Management for the UAE-based Gulf Merchant Bank, and established Dubai-based Themar Partners that was later merged into Phanes Group.
Martin holds an MBA from INSEAD, France/ Singapore, and a Masters in Corporate Law from the University of Hamburg, Germany.
The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.