In 2022, significant solar markets like Europe, China, India, and the United States will see an increase in installations worth $170 billion, with the distributed solar industry, led by China, seeing the most growth. While the cost of PV systems fell by half on average from the year 2013 to the year 2020, prices have risen by 4% this year due to supply-side restrictions and worldwide logistical challenges.
According to IHS Markit, one of the biggest difficulties is the cost of polysilicon, that has more than tripled in the last year. It believes that typical module cost of production has climbed by more than 15% since August 2021, and that module prices have now returned to 2019 levels. According to PV Price Watch, module costs are unlikely to fall below US$0.28 – 0.32c/W until at earliest Q3 2022, with several EPCs deferring large-scale projects and changing investor projections as a result.
Given this, IHS Markit’s forecast – particularly for the residential and the commercial and industrial (C&I) industries – will be seen as a godsend for the industry as it battles to traverse a particularly tumultuous moment. “Multiple projects have been postponed or terminated in the utility industry in 2021, which has been the most hit.” “By contrast, one of the success stories of solar PV in 2021 has been the strong growth of distributed generation – residential and C&I sector,” stated Josefin Berg, who works as the research manager in charge of the clean energy technology at the IHS Markit firm, which predicts that PV installations will continue to grow in double digits this year.
According to the research, ongoing growth, next year will represent the “second year in a row of double-digit development of world installations in the high-price environment,” implying that growing project costs haven’t diminished solar’s attraction. “There is enormous enthusiasm across international marketplace to invest in and build solar systems,” stated Edurne Zoco, who works as the executive director, renewable energy technologies at IHS Markit. “However, the supply chain is simply not equipped to handle this level of demand; it will take time to react.”
According to IHS Markit’s analysis, high module costs will likely persist until 2023, when they will begin to decline as more capacity is deployed in China, energy limitations are lifted, and increased module efficiencies come into play. However, the London-based research organization cautioned that policy uncertainties in China, the United States, and India might stymie deployment plans.