Role of solar energy

Reaching an annual solar PV generation level of approximately 8 300 TWh in 2030, in alignment with the Net Zero Scenario, up from the current 1 300 TWh, will require annual average generation growth of around 26% during 2023-2030. This rate is similar to the expansion recorded in 2022, but maintaining this momentum as the PV market grows will require continuous effort. 

Utility-scale plants were responsible for about half of global solar PV capacity additions in 2022, followed by distributed capacity in the commercial and industrial (25%) and residential (23%) segments. The share of utility-scale plants was at its lowest since 2012, as generous policy incentives drove record distributed PV capacity additions in China, Brazil, the United States and the European Union in 2020-2021.  

In the context of high fuel and electricity prices in 2021-2022, distributed PV became an increasingly attractive alternative for many consumers, which has sparked investment. Utility-scale systems are the cheapest source of electricity generation in most parts of the world. However, building large-scale installations is becoming increasingly challenging in many countries due to the lack of suitable sites and complicated permitting procedures, which favours small-scale, rooftop PV systems.  

Continuous support for all PV segments will be needed for annual solar PV capacity additions to increase to about 800 GW, in order to reach the more than 6 000 GW of total installed capacity in 2030 envisaged in the NZE Scenario. Distributed and utility-scale PV need to be developed in parallel, depending on each country’s potential and needs. 

The solar PV market is dominated by crystalline silicon technology, for which the production process consists of four main steps:

Production of high purity polysilicon

Crystallisation into ingots and slicing into thin wafers

Production of PV cells

Assembly of PV modules  

In 2022, global solar PV manufacturing capacity increased by over 70% to reach 450 GW for polysilicon and up to 640 GW for modules, with China accounting for more than 95% of new facilities throughout the supply chain.  

According to investment announcements by manufacturers and the expected impact of industrial policies introduced in the United States (IRA), India (Production Linked Incentive) and the European Union (The Green Deal Industrial Plan), global capacity will more than double in the next five years. However, despite these efforts to geographically diversify the supply chain, announced projects indicate that China is likely to maintain its 80-95% share in solar PV manufacturing capacity in this period. 

While solar PV manufacturing capacity in 2030 is expected to be well above what is required to cover 2030 demand in the Net Zero Scenario, greater efforts are needed to increase the resilience and geographic diversification of the supply chain.  

Crystalline silicon remains the dominant PV technology, with new, more efficient designs expanding their market shares

Crystalline polysilicon remains the dominant technology for PV modules, with a market share of more than 97%. Various different types of wafers and cells are used for crystalline polysilicon solar, with some more efficient than others. The shift to more efficient monocrystalline wafers accelerated in 2022, with the technology capturing almost all crystalline PV production. In parallel, a more efficient cell design (Passivated Emitter and Rear Cell [PERC]) is also expanding its dominance with almost 60% market share. Other new, even higher-efficiency cell designs (using technologies such as TOPCon, heterojunction and back contact) also saw expanded commercial production and captured about 35% of the market in 2022. 

Strong policy support for solar PV is driving the acceleration in capacity growth

Policy support remains a principal driver of solar PV deployment in the majority of the world. Various types of policy are behind the capacity growth, including auctions, feed-in tariffs, net-metering and contracts for difference. The following important policy and target changes affecting solar PV growth have been implemented in the past couple of years: 

China published its 14th Five-Year Plan for Renewable Energy in June 2022, which includes an ambitious target of 33% of electricity generation to come from renewables by 2025 (up from about 29% in 2021), including an 18% target for wind and solar technologies. 

In August 2022 the federal government of the United States introduced the IRA, which significantly expands support for renewable energy in the next 10 years through tax credits and other measures. 

In May 2022 the European Commission proposed to increase the European Union’s renewable energy target for 2030 to 45% as part of the REPowerEU Plan (which would require 1 236 GW of total installed renewable capacity, including 600 GW of solar PV). Many European countries have already expanded their solar PV support mechanisms in order to accelerate capacity growth with a view to the 2030 targets and in response to the energy crisis caused by Russia’s invasion of Ukraine. In addition, in February 2023 the Commission announced The Green Deal Industrial Plan, aiming to support the expansion of clean energy technology manufacturing, including solar PV.