IHS Markit: PV and energy storage lead the trend of clean energy technology in 2022

IHS Markit: PV and energy storage lead the trend of clean energy technology in 2022

IHS Markit, a research institute, recently released an annual report on the development trend of photovoltaic and energy storage industries. The company pointed out in the report that solar system and energy storage system led the trend of clean energy technology in 2022. The company defines distributed generation facilities (DG) as photovoltaic systems with an installed capacity of less than 5MW, and the installed capacity is expected to increase by 20% in 2022.

IHS Markit said that in the challenging market environment, the photovoltaic industry continues to show strong flexibility. Although many utility scale photovoltaic projects have been postponed or cancelled in the past two years, distributed generation facilities have not lost their appeal.

The report points out: "This difference not only reflects the promotion of distributed generation policies in individual markets, but also reflects the concerns of many consumers about high electricity prices and climate footprint."

About 60% of the increase in installed capacity of distributed power generation facilities occurred in China and Germany, which are implementing the policy of taking distributed power generation as the core part of renewable energy goals. Brazil is another high-profile distributed generation market, because the distributed generation facilities installed by 2023 will still be free of grid connection charges. On the contrary, in the United States, because many major state markets have cancelled the net measurement policy, this market segment may shrink significantly.

An analyst from IHS Markit said: "Even at a high level of capital expenditure, the electricity generated by distributed generation facilities still has the ability to compete with retail prices in many markets, which means that the distributed generation sector is not as sensitive to electricity prices as the utility scale photovoltaic system."

Capital expenditure increase

Although the capital expenditure in 2022 is higher than expected, a new mode of renewable energy growth has emerged. Renewable energy has become the cheapest source of power generation in the world. Due to technological development and policy progress, the cost reduction has led to further capacity increase and price reduction.

Investors in the photovoltaic industry have expected that capital expenditure will continue to decline, but with the maturity of technology, the decline rate of capital expenditure has slowed down. In addition, supply chain barriers and rising transportation and material costs led to higher capital expenditure of PV projects in 2022 than expected.

With the increase of renewable energy penetration, the focus is no longer on reducing costs, but on providing value for the power system. An analyst from IHS Markit said: "At a time of high volatility in the market, the predictability of renewable energy operations has been paid attention to."

Investors also see renewable energy investment as a way to achieve climate commitment and reduce risk portfolio. IHS Markit said that the integration of renewable energy industry and the strong promotion of green financing have reduced the capital cost of renewable energy projects. The recent fluctuation and surge in electricity prices have increased the installed capacity of renewable energy.

An analyst from IHS Markit said: "These perceived values offset the higher-than-expected capital expenditure of the photovoltaic industry and support the continuous construction of new renewable energy capacity."

The supply chain dilemma, trade barriers, geopolitical and other factors have been driving PV manufacturers to meet the needs of end users. IHS Markit said that the supply chain tension may last for a period of time, but there have been some positive developments:

• The growth rate of polysilicon capacity is faster than expected.

• New entrants to the silicon chip market will increase capacity and price competition.

• China's photovoltaic manufacturing is no longer limited by energy intensity and energy consumption.

With the growth of the supply chain and the adaptation to the new international trade environment, India, the United States, Europe and Southeast Asia will continue to announce the increase of the capacity of silicon ingots, silicon wafers, photovoltaic cells and solar panels in 2023.