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Thanks to China, 2019 will be the year of photovoltaics
June 12, 2019
Abstract : After twenty years of investment, 2019 will be remembered as the year in which the installation finally took off. Credit goes to China.
MILAN, June 10 (Class Editori) -- After twenty years of investment, 2019 will be remembered as the year in which the installation finally took off. Credit goes to China. In the last ten years there has been a rapid growth in the installation of solar plants at a global level: in just 7 years, from 2011 to 2018, the total installed capacity has seen an increase of 600%, going from 70 GW to the current 500 GW. The installed global capacity is now 77 times greater than it was at the end of 2006 (6.5 GW), according to the analysis carried out by François Perrin, East Capital portfolio manager in Hong Kong.
In 2018, Beijing took a leading role worldwide, covering the largest market for solar energy installation for the sixth consecutive year, with over 44 GW of installations.
Furthermore, the country's cumulative solar power generation capacity increased from 2.1 GW in 2011 to 175 GW at the end of 2018, representing a compound annual increase of 88%. Such growth is largely attributed to a favorable regulatory environment and support policies related to the implementation of the China Blue Sky anti-pollution plan and to the related PM2.5 reduction targets, in addition to the continuous improvement and decline of solar technology costs.
Grid parity is the point at which the cost of energy from alternative sources coincides with or is lower than that of electricity deriving from conventional forms, such as fossil fuels. The costs associated with solar power generation have declined rapidly in recent years due to technological progress and scale economies. Since 2011 the cost associated with photovoltaic (PV) systems in China has fallen from 17.5 RMB/Watt to 4.5 RMB/Watt in 2018, while the cost of photovoltaic modules has fallen by almost four times over the same period. The launch of Chinese government policy on the parity of the photovoltaic network in May 2018 has only accelerated this trend and this year the cost of installing photovoltaics is reaching 4 RMB/Watts in the country.
The network parity policy has important implications for China, and not only, explained Perrin. This has led to halve the installation costs in the last 12 months, and today is also bringing solar energy to cover the position of most economic source in many countries, beyond coal or any other conventional source of primary energy to carbon emission.
This year the grid parity has already been reached in 10 of the 23 Chinese provinces, and from 2019 onwards, even emerging economies, such as India, United Arab Emirates, South Africa and Mexico and developed, such as Australia, will benefit from the results achieved by China in cutting solar costs, with installation costs for utilities lower than coal. In the United States, solar power will reach grid parity by 2020, in Germany and Saudi Arabia by 2021 and in Japan, the United Kingdom and Brazil by 2022.
Therefore, the East Capital analyst concludes that, "After twenty years of investment in the photovoltaics, 2019 will be remembered as the year in which the installation finally took off. From 104 GW of additional capacity in 2018, we expect the installations to reach 130 GW in 2019 and 150-170 GW in 2020. The proportion of the global photovoltaic market that has reached grid parity will gradually increase from 50% in these twelve months to over 90% in 2022, which represents a significant increase".
China controls two-thirds of the world's polysilicon production, 97% of wafers and 82% of photovoltaic cells and modules developed in the continental area, practically handling the entire value chain. Leadership in terms of costs and technology will continue to be driven by Chinese companies, and we expect further acceleration of consolidation in the context of grid parity.
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