Solar power system prices will fall over the next decade, thanks to advances in module efficiency, manufacturing, labour practices and software, according to a report by Wood Mackenzie.
The consultancy firm says the 2020s will be defined by two trends: “solar plus” solutions; and a shift to a more holistic approach to cut lifetime solar power system costs.
“The urgent need to fight climate change will demand the solar industry to think creatively beyond what was previously expected to be feasible,” the firm wrote in a press release.
WoodMac senior analyst, Xiaojing Sun and Lindsay Cherry, Wood Mackenzie analyst, say four other key trends to watch in the global solar market in the coming decade include:
- Repowering existing solar plants
- Trade tensions and tariffs
- Intelligent manufacturing will revolutionize solar supply chain
- Cybersecurity breaches could become commonplace
Sun said “Enhancing solar system performance is crucial for lowering LCOE. Module and system components innovation will increase the energy generation per watt and reduce degradation.”
Intelligent system design, using software powered by data analytics coupled with real-time performance monitoring, will ensure solar systems are designed and operated to maximize energy generation and financial performance, added Sun.
By implementing 30-year module performance warranties, the lifetime of solar power plants will be on par with that of natural gas combined-cycle plants and will increase the competitiveness of solar in the energy marketplace.
“Innovations in wafer, cell, and modules will increase the panel power output without proportionally increasing manufacturing costs,”said Sun. “We are likely to see widespread applications of n-type bifacial modules using large wafers with improved hotspot performance and lower light- and temperature-induced degradations.”
Module manufacturers are expected to implement efficient and automated practices to help cut production costs. This could mean that 500W+ modules will be common during the second half of the 2020s, but will not cost more than today’s 400W modules.
Wood Mackenzie says that in the 2020s, solar energy as a standalone application will be less relevant than today and solar plus applications will begin to take over the market.
Higher costs are a common challenge faced by most “solar plus” applications. If floatovoltaics can offer any insight, costs are expected to decline as competition among vendors and developers escalates with more market entrants and rising demand.
Solar-plus-storage is the most talked about “solar plus” application. As solar and storage costs are driven down the curve, Wood Mackenzie says more utilities are likely to turn to solar-plus-storage instead of solar-only procurements to provide more dispatchable capacity on their grids.
Wood Mackenzie says recent utility solar-plus-storage procurements in the US give a good preview of what’s to come during the new decade in system design and architecture.
More system integrators have warmed up to DC-coupled solutions that eliminate the need for a second inverter and the firm says it expects to see greater integration of solar and storage hardware components.
As well, WoodMac argues the market for repowering existing solar power plants will take off in the 2020s as the global install base for solar ages.
Lindsay Cherry said “The repowering of solar systems allows for production of more electricity while using existing land, interconnection points and other infrastructure, leading to a lower LCOE.
“From 2020 – 2030, the potential market for solar repowering sites that have reached 20 years of operation could hit 67 GWdc cumulatively,” said Cherry. “This could be a major boon for asset owners, O&M providers and solar component manufacturers.”
Cherry adds that more efficient and less expensive technology, “repowering may even pencil out for sites younger than 20 years.”
Potential repowering market by year for 20-year-old systems, 2020 – 2030 (MWdc)
Sun says that trade is good for the expansion of solar power globally, however, trade barriers drive up the cost of solar and reduce the potential for deployment.
Under President Trump’s three different solar-related tariffs, solar modules sold in the US are on average 45 per cent more expensive than in other major developed countries.
“If the US were to remove all tariffs on imported solar modules today, system prices would go down by nearly 30 per cent,” says Sun. According to Sun, in the no tariff scenario, utility-scale solar in the US would cost less than $1.00/Wdc to build in 2020, two years earlier than its current cost trajectory.
“On the contrary, if the US decided to repeat the same set of tariffs for another round, by 2026 it could cost twice as much to buy solar modules in the US than in Europe or Canada.”
Should all existing solar power tariffs be removed, Chinese module makers would see their global market share rise, but the biggest beneficiary would be American solar developers and consumers.
Solar-plus-storage economics would also improve and, considering falling battery costs, the 2020s could be the decade where solar-plus-storage becomes a competitive base load resource.
“However, a sudden do-away with tariffs would deal a huge blow to US domestic module manufacturers,” argues Sun. “Southeast Asia’s capacities would also be negatively affected,” added Sun.
The combination of 5G technology, artificial intelligence, the internet of things, solar modules, inverters and trackers may result in the solar power manufacturing sector experiencing a technological revolution over the next decade.
Solar power modules, inverters and trackers will be produced in smart factories which will be highly automated and significantly more efficient and productive than current-day facilities.
Fully automated production lines will mean less reliance on labour and a stronger focus on IT and telecommunication technologies.
According to WoodMac, these processes will weaken or even neutralize the labour cost advantage of some Asian manufacturers and the capital required to adopt 5G technologies will also create a high barrier to entry and favour players with deeper pockets.
As well, an increasing reliance on technology comes with the threat of cybersecurity breaches.
“Security experts view an attack on the electricity grid as imminent, which could have serious and far-reaching implications for the solar industry,” said Lindsay Cherry.
“The growth of distributed energy resources is of particular concern. While cybersecurity is addressed in portions of federal standards in the US, no comprehensive standard exists, leaving solar plants and the grid vulnerable.
“If a cyberattack hit the solar industry tomorrow, it would severely jeopardize the reliability of plants and hurt the industry both reputationally and operationally,” added Cherry.
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