For the 9th year in a row, solar power attracted the largest share of new investments in renewable energies, followed by wind power. The USD 140 billion (EUR 122 billion) in-vestments in solar energy, accounted for 42.5 % of all new renewable energy invest-ments. While the annual investment decreased by 13%, the newly installed capacity of solar photovoltaic power increased by about 5% to over 107 GW in 2018.
Over the last 15 years, the production volume of solar PV has increased with a compound annual growth rate (CAGR) of over 40 %, which makes the industry one of the fastest growing ones in the world. Until 2006, the solar cell production was dominated by Japan and Europe. After the rapid increase of the annual production in China and Taiwan since 2006, a new trend emerged in 2014 to rapidly increase production capacities in other Asian countries such as India, Malaysia, Thailand, the Philippines or Vietnam.
Market development for solar PV systems did not follow the production at the same pace, which led to overcapacities and massive price pressure along the production value chain. This development triggered a consolidation of the manufacturing industry, which is still ongoing.
R&D spending for renewable energies increased by 10% to reach USD 13 billion (EUR 11.3 billion). About half of this R&D went to solar energy. However despite the urgent need for a rapid decarbonisation of our energy supply this is still only 10.7% of the total R&D spending of USD 121 billion (EUR 105 billion) for energy.
The trend that the developing economies invest more in renewable energy capacity than the developed ones continued for the fourth year.
The PV industry has changed dramatically over the last few years. China has become the major manufacturing country for solar cells and modules, followed by Taiwan and Malay-sia.
According to market forecasts, the installed PV power capacity of 520 GW at the end of 2018 could reach up to 1.4 TW by 2024. At the end of 2019, worldwide solar PV power is expected to reach 650 GW capable of producing roughly 4 % of the worldwide electricity demand. The EU’s share is about one fifth of the world-wide installed capacity and can provide about 5.5 % of its electricity demand.
Recent 100% renewable electricity scenarios have highlighted the importance of solar photovoltaics to achieve this goal and decarbonise the power sector in a cost effective manner. To realise a carbon free power supply by 2050, the installed PV generation ca-pacity of about 650 GW at the end of 2019 has to increase to more than 4 TW by 2025 and 21.9 TW by 2050. This indicates that the installation rate has to increase by a factor of 2.5 until 2025. The European Union needs to increase its capacity from 117 GW at the end of 2018 to more than 630 GW by 2025 and 1.94 TW by 2050. In case of a transition to a sustainable transport sector, i.e. electrification and synthetic fuels, these numbers would need to increase by a factor of two.
2016 already saw a number of record breaking power purchase agreements (PPA) con-tracts and bids below USD 30/MWh and the trend for bids below 25 USD/MWh has accel-erated in sun rich regions in 2017 and 2018. The trend continued in 2019 with offers be-low USD 20/MWh. These very low bids and PPAs are only possible through a combination of excellent solar resource, high debt shares and very low debt costs as well as the fact that some tariffs are indexed to inflation.
PV is a key technology option for implementing the shift to a decarbonised energy supply and can be deployed in a modular way almost everywhere on this planet. Over the last decades the growth of PV energy use was mainly driven by public incentives, but the shift now to economics driven use of solar PV electricity as one of the lowest cost elec-tricity supplies is obvious.