Solar energy and energy storage dominate IHS Markit's latest annual report on clean technology trends in 2022. Distributed generation is defined by the research company as a photovoltaic system with a scale of less than 5 MW, which is estimated to increase by 20% in 2022. This segment continues to show strong resilience in a challenging and high cost environment. Although many utility scale projects have been postponed or cancelled in the past two years, distributed generation has not lost traction. This difference not only reflects the promotion of DG policies in individual markets, but also reflects the concerns of many consumers about high electricity prices and climate footprint.

About 60% of DG growth takes place in China and Germany, which are pursuing the policy of making DG a core part of their renewable energy goals. Brazil is another high-profile DG market, because the net metering system installed by 2023 will still be free of grid charges. On the contrary, as the net measurement of many major state markets has been stripped off, this segment may decline significantly in the United States this year.

IHS Markit said that even at a higher level of capital expenditure, the generation capacity of DG system is still competitive with the retail electricity price in many markets, which means that the DG market segment is less sensitive to price than photovoltaic in the scale of utilities.

Increase in capital expenditure

Although the capital expenditure in 2022 is higher than expected, a new paradigm of renewable energy growth has emerged. Renewable energy is already the cheapest new energy in the world. The cost reduction caused by technological development and policy progress has led to further capacity increase and price decline.

Solar investors expect that capital expenditure will continue to decline, but with the maturity of technology, the decline rate of capital expenditure will slow down. Combined with supply chain barriers and rising transportation and material costs, the capital expenditure of solar projects in 2022 is higher than expected. With the increase of renewable energy penetration, the focus is not on cost, but on the value provided for the system. At a time of high volatility, the predictability of operating renewable energy is valued. IHS Markit said that the integration of renewable energy banking business and the strong promotion of green financing have reduced the capital cost of renewable energy projects. Recent fluctuations and soaring electricity prices have improved the capture price of renewable energy. These perceived values offset the higher than expected capital expenditure of the industry and support the continuous construction of new renewable energy capacity, IHS Markit said.

Supply chain difficulties, trade barriers and geopolitics have been driving PV manufacturing capacity closer to end users. IHS Markit said that the supply chain tension may last for some time, but there have been some positive developments: the capacity growth of new polysilicon capacity is larger than expected. New entrants to the silicon chip field will increase production capacity and price competition. China's photovoltaic manufacturing will now be excluded from the limits of energy intensity and energy consumption power.

With the growth of the supply chain and adaptation to the new international trade environment, the capacity of new ingots, silicon wafers, batteries and components in India, the United States, Europe and Southeast Asia will continue to be announced in 2023.Editor/Xing Wentao