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Solar PV Sets New Records Nationally and Globally

Frank Swigonski's picture
Advanced Energy Economy

Regulatory Analyst for Advanced Energy Economy

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  • Aug 4, 2017 11:00 am GMT

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In 2016, the solar PV industry set a record with an estimated 77.2 GW of new capacity installed around the world – 52% above 2015’s installation figure of 51 GW.[1] That does not mean the year was an easy one for the industry. Pricing pressure on manufacturers and developers alike kept revenue growth from matching the rate of deployment. Still, the global market grew 35% in 2016, to $131.8 billion.

Solar PV module prices continued their dramatic price drops in 2016 – by as much as 30%. Expansion of PV manufacturing capacity between 2015 and early 2016 caused a slight overcapacity, stimulating price competition between manufacturers. Also, countries around the world changed from Feed-in Tariffs (FiTs) to competitive auctions, which forced developers to cut margins to win deals. These factors led to record deployment – and lower costs for solar power. 2016 marked the lowest Power Purchase Agreement (PPA) price for solar PV, with Dubai Electricity and Water Authority signing a $0.029/kWh PPA in the United Arab Emirates for phase three of the 800 MW Mohammed bin Rashid Al Maktoum Solar Park. The 350 MW project will be built by a consortium led by the Masdar Group and will be commissioned by 2020.

U.S. installations also set an all-time high, with an estimated 14.6 GW of capacity added in 2016 – a 90% increase over 2015. Utility-scale installations accounted for more than two-thirds of the total. The U.S. market surged in anticipation of the scheduled reduction of the federal Investment Tax Credit (ITC) at the end of 2016. Instead, the ITC was extended late in the year through 2019 at the 30% level. Some projects that would have been fast-tracked to catch a vanishing ITC have now been spaced out, carrying the utility-scale boom into 2017 and beyond.

Commercial and residential capacity additions also increased in 2016, but at a slower rate. There were an estimated 2.7 GW of new residential additions and 1.6 GW of commercial installations in the U.S. market in 2016. These two segments have accounted for between 40% and 60% of the total market the last five years, but dropped below 30% in 2016 as utility-scale installations took off. (It is important to note that a significant portion of corporate PPA-driven expansion is off-site and therefore counted under the utility-scale total.)  California, North Carolina, Arizona, New Jersey, and Nevada continue to lead the market, but growth in Georgia, Utah, Texas and even South Carolina, among others had strong showings in 2016, contributing to the new record. California, the largest market for residential solar, saw a decline in new additions in 2016 compared to prior years.

Globally, solar PV growth in 2016 was led by China. The country doubled its capacity additions to around 30 GW – 22 GW in the first six months of 2016 as developers rushed to benefit from the 2015 FiT. The Japanese market fell an estimated 14% compared to 2015, but still added 8.7 GW, making it the third-largest market worldwide, after the United States.

One of the countries that showed strongest growth was India, which more than tripled new capacity additions from 2 GW in 2015 to over 6 GW in 2016. (The total of 2016 installations was approximately 8 GW near the end of the year, but a number of projects then in the commissioning stage officially came online in 2017.) The country must further increase growth in order to achieve its ambitious target of 100 GW of solar capacity by 2022. The Ministry of New and Renewable Energy is therefore focusing on large utility-scale installations and recently doubled its new generation target for this category from 20 GW to 40 GW by 2020. The target calls for a total of 60 GW of combined “Large- and Medium- Scale” systems to compliment 40 GW of rooftop systems.

Meanwhile, at an estimated 7.1 GW of installations, Europe had its worst year since 2007 – a 17% decline from 2015. Despite the relatively high retail cost of electricity on the continent, the solar industry in Europe is going through a transition period. The industry is expected to further decline in 2017 as incentives expire in the UK, the largest market during the past two years. But not all is gloomy. Italy, which recently adopted net metering, increased solar installations in 2016. In Spain, the government is rethinking the so-called “sun tax” that amounted to a retroactive tax for onsite consumption. If the tax is reversed, it could help to revive development in the country with the best solar resources on the continent.

[1] Official estimates range from 50-58 GW for 2015 due to different reporting methodologies. For the purpose of this report, Navigant Research used a conservative estimate.

Learn more about the full size and scope of the U.S. and global advanced energy markets in this year’s Advanced Energy Now Market Report, available free at the link below:

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This post is one in a series of feature stories on trends that shape advanced energy markets in the U.S. and around the world. It is drawn from Advanced Energy Now 2017 Market Report, which was prepared for AEE by Navigant Research.

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Darius Bentvels's picture
Darius Bentvels on Aug 4, 2017

A more important explanation for the low increase of solar in the EU, are the high import tariffs & import restrictions for PV-cells and PV-panels.
Those are a stand in the way for substantial growth!

They demonstrate the failing climate commitment of Brussels,

Nathan Wilson's picture
Nathan Wilson on Aug 5, 2017

It’s hard to imagine a worse fit for solar PV than the UK, with it’s northern location and low summer electricity demand. I suppose they had to deploy a small amount to appease the public, but now it’s time to move on.

India is a better fit, climate-wise for solar. But solar is an expensive technology for a poor country. Let’s hope they keep solar below 20% of grid capacity, so the economics and integration issues don’t become too painful. Their grid is currently at 300 GW and growing rapidly, so their 6 GW/year PV installation rate is probably fine, long term.

Roger Arnold's picture
Roger Arnold on Aug 6, 2017

A considerably less optimistic picture is painted in an article in the current (Aug 5-11) issue of New Scientist.

In an article titled “The Green Revolution is Stalling”, author Michael Le Page reports that, far from continuing on an exponential growth path at a rate sufficient to avoid catastrophic levels of ocean acidification and global warming, the overall growth curve for variable renewables shows signs of flattening. Growth is strong only in countries where subsidies are high and the current base is low. With a low base, the cost of integrating new wind and solar is low. At higher penetration levels, the cost of integration rises steeply.

Apparently, that’s the point at which subsidies are reduced and growth moves elsewhere. The article cites a study by the London-based Green Alliance think tank, predicting dire consequences from the pending withdrawal of subsidies. They expect spending on renewables in the UK to plummet 95% over the next three years.

The article also cites a professor at the University of Bergen, in Norway. His research, published in Renewable and Sustainable Energy Reviews, “suggests that renewables could peak by 2030, before they supply even a tenth of the world’s energy.”

Also telling is a chart of global non-fossil energy use since 1965. In ’65, non-fossil energy stood at 5%, almost all of which was hydroelectric. It gradually rose to 13% by 1990, almost entirely from the growth of nuclear. Since then, the share of non-fossil energy has hardly budged. Growth of wind and solar has barely offset the decline of nuclear.

Bottom line seems to be that the “100% wind, water, and solar” pipe dream that Mark Jakobson has promoted increasingly appears to be just that — a pipe dream. I see only four possibilities for avoiding disaster:

1) A major comeback for nuclear;

2) Implementation of CCS to “tame” fossil fuels;

3) Major breakthroughs in large scale energy storage and power transmission;

4) New, economically efficient forms of renewables that can scale quickly.

These possibilities, of course, are not mutually exclusive. We could use all of them.

For option 3), the energy storage needed is beyond what incremental advances in battery storage can provide. Batteries are still far too expensive to fill in completely for variable renewables — much less provide for seasonal energy storage.

For option 4), a good candidate is StratoSolar. It’s independent of weather, has a low land footprint, and can integrate efficient, low cost energy storage. But there are other wildcard possibilities. Advanced forms of OTEC and/or ocean biomass.

The big issue with the latter two is speed of scaling. We don’t have much time left.

Helmut Frik's picture
Helmut Frik on Aug 7, 2017

your argumentation about renewables “moving on” implies constant costs for renewable power generation, which does not fit to the drastic prices decreases till now, and as it looks like for the comming years, too.
Wind power installation in germany is at highest numbers ever, and solar power installation is rising again, at price levels below new coal or Gas power plants. So financially supported only to remove fossil generation faster from the grid than it would die “naturally” due to age of power plants.
This is also changing politics in spain, where they also open brakes again on renewable power installations. Things are changing fast today.

Engineer- Poet's picture
Engineer- Poet on Aug 7, 2017

solar power installation is rising again, at price levels below new coal or Gas power plants.

So the “environmental fee” of the Energiewende is being reduced or repealed, because these generators won’t receive anything from it?

Please.    When you say “price levels”, you mean subsidized wholesale price, not what consumers actually pay or what the generator gets paid.

Bob Meinetz's picture
Bob Meinetz on Aug 7, 2017

Roger, nice to see “a major comeback for nuclear” in the #1 spot on your list.

On Friday I attended a reception at Michael Shellenberger’s Environmental Progress headquarters in Berkeley, where EP Fellows – student interns – made presentations on various aspects of nuclear’s value to fighting climate change. To witness the enthusiasm of these young and energized individuals was inspiring, and a source for optimism.

A general theme of the presentations was this: the time for an all-of-the-above solution, except in highly specialized situations, has passed us by. For generating utility electricity, the idea we can “tame” fossil fuels, and count on renewables, are not complementary to nuclear but enemies of it. And in discussions with them afterward, I found it hard to argue with that conclusion.

The big issue with the latter two is speed of scaling. We don’t have much time left.

Another conclusion, amended to read “the latter three”, with which I’d find it hard to argue.

Roger Arnold's picture
Roger Arnold on Aug 8, 2017

“All of the above” remains our best hope, IMO. Despite the fact that I support nuclear as the most viable approach in the long term, I can’t ignore the fact that it’s the very long term we’re talking about.

Nuclear does have problems. Topping the list is probably the anti-nuclear culture that has been allowed to flourish, and the side effects of that. The regulatory hurdles pose huge burdens in cost and schedule. The hostile public environment creates high project risk, in part from the certainty of lawsuits that will escalate costs, and in part from the fact that new builds can’t reasonably be expected to pick up enough that the experience curve will kick in to reduce cost and schedule. Each project has to be approached as a “one off” with inexperienced personnel.

It pains me to make those observations. It’s saying that “nuclear is bad, because people think that it’s bad.” The situation sucks, and I strongly support efforts to turn attitudes around. I’m particularly encouraged to see Michael Shellenberger going after the dark soul of the anti-nuclear movement. But so long as power plants are built and owned by corporations, and corporations have to make a profit, it’s going to be hard to get nuclear power back on track. In this country. I can’t really blame electric utilities for being gun shy about new nuclear plants.

But if the anti-nuclear culture in the U.S. and Western Europe tops the list of problems, it’s not by any means the only problem. The fact is that current generation of nuclear power plants really are complex and hard to build. Moreover, it’s something we’ve largely forgotten how to do. Even France has that problem. The folks who built all those reactors that give France the lowest per-capita carbon emissions of any country in Europe have pretty much all retired or died. For anything as complex as a jumbo jet or a nuclear power plant, it requires continuous production to maintain the experience base. The Gantt charts and supply lines get horribly complex. It takes a lot of experience to avoid costly mistakes and keep the project running smoothly.

China, which has no problem of litigious and well-funded anti-nuclear activists to contend with, has been building new plants at an increasing tempo for over 25 years now. They’re world class in heavy construction, and have by now gained a good amount of experience with nuclear builds. But it still takes them 5 years or more from breaking ground to first power. That’s not to say that a plant that will crank out safe clean power for 50 years isn’t worth it, but it’s not something that has much appeal in a business obsessed nation whose attention is largely focused on the earnings report for the next quarter.

Helmut Frik's picture
Helmut Frik on Aug 8, 2017

I say what I mean, and what is real world. New gas or coal power generation would need higher prices that it is payed to new wind or solar power in the tenders. As simply as that. Otherwise coal and will be in red numbers from day one.Today average wholesale price in germany covers exactly the costs for hard coal in average. Not for employees, not for repairs, not or insurances and taxes, and surely not for investet capital, and never think of any profit.
The EEG – levy will remain about constant till about 2020 and then start to drop as todas numbers look like. There is no further rise in sight.

Bob Meinetz's picture
Bob Meinetz on Aug 8, 2017

Roger, good points all.

IMO, nuclear plants of our current generation are only hard to build because we’ve made them that way. The first U.S. nuclear power plant, Shippingport, cost $494 million (2017 dollars). It produced 7.4 trillion watthours of clean energy over its 25-year life. Since 1957 that price has multiplied twentyfold, and the chief reason is not complexity but culturally-ingrained fear which today even infects those who should know better.

For example: San Onofre was closed in 2012 due to water leaking from the plant’s secondary loop onto the turbine room floor. Even though radiation exposure to plant workers was .000005 μSv/hr – 97 million times less than that deemed to “significantly endanger human health” – the entire plant was shut down. Even though the volume of leakage was half the volume requiring shutdown under NRC guidelines, the plant was shut down anyway – out of an overabundance of caution.

Not sure where I first encountered the phrase “overabundance of caution”, but it seems emblematic of the industry’s problems. That inconsequential water leak was eventually blamed for permanent shutdown, costing ratepayers in excess of $10 billion in capital cost recovery for stakeholders (Southern California Edison and Sempra Energy) and adding 8 million tons of CO2 emissions to California’s profile.

Agreed, that our business-obssessed nation and anti-nuclear activists are significant obstacles. Both are being confronted by NuScale, which in 2021 will begin building its first Small Modular Reactor prototype. Speed of deployment, reliability of assembly-line construction, and modularity (both physical and financial) will make it an attractive investment for utilities within a decade. I’m informed by Lena Kollar, the company’s marketing director, the company is devoting considerable thought to how it will be marketed.

If I could only get them to reconsider burying it underground – they’re going to run into problems with that one.

Engineer- Poet's picture
Engineer- Poet on Aug 8, 2017

Correction re:  San Onofre:  The leak was from the primary coolant to the secondary coolant, in the steam generators.  There was negligible radiation exposure to anyone; IIUC the leak was detected by the presence of N-16 (produced by (n,p) reactions in oxygen) in the secondary coolant.

Engineer- Poet's picture
Engineer- Poet on Aug 8, 2017

New gas or coal power generation would need higher prices that it is payed to new wind or solar power in the tenders.

Yet you have to pay it, because your new wind and solar power have a habit of simply going away when people still need electricity.  If you allow the rigged market to put these plants out of business, you will be doing without electricity more and more often.  This is what happens in South Australia, and will happen in Germany.

I say what I mean, and what is real world.

What you say is deliberately ambiguous, so you can claim not to have meant something when you are “caught with your hand in the cookie jar”.

We have been into your tricks for a very long time.  Don’t try to pull them here.

Helmut Frik's picture
Helmut Frik on Aug 9, 2017

First it is not necessary to build nee Power plante, there are more than enough existing ones.
Second Herr in Germany Power plante are not allowed to leave the grid without Perkussion.
Third there is no need for expensive coal or Gas Power plante with prices of 1000-2000€/kwp, for a few hundert hours or less per year cheaper Generators Like additional Motors for Biogas plants Gas motors running on natural Gas or Distribution for 150€ per kwp do the Job perfectely, ramping from Zero load to füll load and Back in less than a minute. Usually the smoothing effects of the grid will do.

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