Distributed Generation Solar’s Rapid Growth: A New Era in Energy
In a remarkable turn of events, the surge in small-scale photovoltaic (PV) systems has fueled an astonishing 200 GW of solar capacity installation within the past year. As we brace for the future, the potential of this trend is set to escalate even further, with projections indicating that capacity could surpass the 300 GW mark this year. Brace yourselves, for the realm of utilities, is on the verge of a monumental reset.
A Paradigm Shift: Independent Aggregators and the Emergence of Virtual Power Plants
The landscape of energy generation is undergoing a paradigm shift as independent aggregators take center stage in shaping the energy narrative. The birth of Virtual Power Plants (VPPs) is now reshaping the distribution of generation and storage control, wresting it from the conventional grasp of utilities. These VPPs, orchestrated by independent aggregators, introduce a novel dimension to the energy domain, transforming it into a dynamic marketplace. This means that more than 60% of solar capacity could potentially be held under the small-scale umbrella, thus paralleling storage capacity growth. Interestingly, this augmentation is likely to be funded by homeowners or the individuals invested in the systems themselves, forming an integral part of the revenue-generating VPP ecosystem.
A Bright Outlook Despite Challenges
Amidst a backdrop of escalating solar prices, Rethink Energy presents an optimistic outlook for the global PV industry. The past year witnessed an awe-inspiring 30% surge in growth, equating to an addition of 221 GW of solar power. Brace yourselves, for this year is projected to unveil a staggering 50% surge in growth, and the same promising trajectory is anticipated for 2024. These estimations draw strength from the bedrock of last year’s 330 GW annual solar manufacturing capacity, which has been bolstered by an additional 45 GW per month in the current year.
A Distributed Energy Revolution
Our estimations reveal a remarkable facet of the solar revolution: rooftop panels stole the spotlight, contributing a commendable 57% to the total solar capacity added in the past year. This trend is poised to persist beyond the horizon, maintaining its dominance above the 50% threshold until mid-2025. Notably, the United States, China, and other major markets are witnessing a surge in Distributed Generation (DG) installations. Amidst a backdrop of mounting module prices and other supply chain intricacies impacting utility-scale installations, a spark was ignited by the war in Ukraine. People and businesses alike found solace in adopting solar energy, safeguarding their energy security.
Navigating the Shifting Landscape
Anticipating the dynamics of the future, Rethink Energy envisions a shift in the solar pendulum. The period spanning from 2025 to 2030 is poised to witness a resurgence in utility-scale dominance. As manufacturing bottlenecks alleviate and module prices, constituting around 40% of project expenses, return to their downward trajectory, the solar industry will experience a revival. Although prices surged to unprecedented heights, cresting at $300 per kilowatt of generation capacity in the twilight of 2021, they have since receded below the $240/kW mark, pre-shipping. All indications point towards a promising descent to $200/kW by 2025, a testament to the industry’s resilience.
A Dual Ascension
The tides of change are set to usher in a dual ascent in the coming years. The vast expanse of the Australian and Chilean deserts is set to host hundreds of gigawatts of capacity, powering the green hydrogen revolution. Meanwhile, the Distributed Generation (DG) potential is poised to soar even higher, propelled by the dynamics of energy pricing.
Unveiling the Power of Distributed Solar
Distributed solar emerges as a compelling force, swayed by a multitude of cost considerations. Remarkably, the spike in polysilicon prices, a constituent still accountable for over 25% of module costs, has scarcely disrupted the financial equation. This resilience has allowed small-scale PV to assert its dominance on the solar stage. While many countries have introduced policies to invigorate rooftop solar adoption, they are, in essence, riding the tide rather than instigating it.
A Vision of the Future
The crystal ball reveals an intriguing trajectory for solar adoption. In the year 2027, utility-scale solar installations will experience a momentary resurgence, momentarily reclaiming the 57% share of new installations it held prior to the pandemic. Yet, the story of solar evolution takes a twist from this juncture. As we progress, a host of enduring trends will weave in favor of Distributed PV. Among these trends, the paramount role of transmission infrastructure looms large as a “next big limiting factor” in the solar domain. As the sands of time sweep us into 2031, a harmonious equilibrium between utility and distributed solar is forecasted, setting the stage for the latter’s second triumphant surge.
Get ready for a transformative journey as the world of energy realigns, driven by the inexorable rise of small-scale PV systems and the unyielding spirit of innovation. The landscape of utilities will be forever changed, and the symphony of solar power will play a new tune, composed by a myriad of distributed sources.
