As photovoltaic (PV) installations continue to build throughout
the world, the global PV installed base is forecast to reach 780
gigawatts (GW) by the end of 2020, up nearly 2,000% from a mere 40
GW a decade ago in 2010. Although some of the strongest periods of
year-over-year growth in the global PV market are behind the
industry, IHS Markit predicts that global PV installations will
exceed 100 GW annually over the next five years.
That phenomenal expansion is fueled by many growth drivers,
including social and political factors related to climate change
and carbon emissions. But PV’s remarkable growth can also be
attributed to a rapid reduction in costs and technology
improvements, making solar-generated power more competitive with
traditional fossil fuel sources like gas and coal.
One challenge standing in the way of further growth in the space
is intermittency in the generation of renewables, with production
in the case of solar limited to daytime hours. This aspect of
renewables acts as a natural limitation for growth and requires
balancing with other energy resources, such as gas or other fossil
fuels. Increasingly, however, the PV market is seeing greater
diversity come into play as more countries begin to invest in
solar. While European markets like Germany traditionally led in the
PV space, new players like China, India, and the US have now become
powerful actors as well—a diversification that has been helpful
as well in spurring PV growth.
Battery storage as alternative power resource
Much of the skepticism against renewables as a stable and
predictable source of power vanishes if the science and mechanics
of energy storage, especially in batteries, could be
perfected—or so the argument goes. While battery-storage
technologies aren’t commonplace in electricity markets yet,
continuing advancements in the field have been helpful in spurring
growth in the entire energy storage space.
To this end, IHS Markit is forecasting demand for 80
gigawatt-hours (GWh) of energy from battery storage to be deployed
within the next five years, a cumulative increase of approximately
400% compared to the installed base at the end of 2018. Like the
spectacular expansion currently happening in the global PV space,
technological innovation and cost reductions will continue to fuel
growth in the battery-storage industry during the coming years.
The glowing prospects for battery storage will be good news to
proponents of integration with renewables, since solar and battery
resources can be combined in a relatively natural, organic fashion.
Abundant solar energy during the middle of a clear and sunny day,
for instance, can be used as a charging element for batteries. The
extra energy stored in the batteries can then be discharged and
made available for use as power after the sun goes down in the
evening.
Such a scenario is especially appropriate for the US market,
which is poised to become the largest market for solar paired with
energy storage over the next few years. The abundant deployment of
solar energy within the country, paired with growing demand for
more flexibility from American utilities and customers, will drive
deployments of hybrid solar and battery storage resources in the
United States.
Beyond the practical economics and advantages of integration
with renewable energy, batteries can provide additional value as an
independent resource in a variety of settings, including utility
applications or behind-the-meter applications for customers of the
electric power grid.
Costs in the overall equation
For both solar and battery storage, the ongoing reduction in
equipment manufacturing and deployment costs will be a critical
factor in propelling both industries forward.
With solar, incremental efficiency gains will continue to
optimize the manufacturing process across the supply chain, from
polysilicon development to semiconductor wafer and cell
integration. With battery storage—lithium-ion,
especially—the field will be the happy recipient of benefits
derived from the increased scaling of the electric vehicle
industry, with profound implications for the future as
electric-powered transportation gains greater market traction and a
switch to clean-fuel cars gets underway.
Within five years, IHS Markit believes solar and battery storage
technology costs will reach a tipping point that will allow such
resources to compete directly with natural gas, which has become a
global benchmark for new electrical generation. That tipping point
is the ability of solar and energy storage systems to generate
energy at an approximate cost below $50 per megawatt-hour. In turn,
the lower cost will help catalyze a paradigm shift for the global
energy industry to move to a cleaner and more resilient electrical
system.
Camron Barati is senior analyst for solar and energy
storage at IHS Markit
Posted 27 June 2019