Solar PV auctions around the world in 2017 resulted in bids at new record lows, noted the annual Renewables Global Status Report (GSR) released by Renewable Energy Policy Network for the 21st Century (REN21).
The report stated that Argentina, Chile, India, Mexico, Saudi Arabia and the Emirates of Abu Dhabi and Dubai (UAE) saw very low bids for solar PV in 2017. Around the world, low bids were due to a variety of factors including: the low cost of components, expectations that technology costs would continue to fall, increased competition among developers, and a relatively low weighted average cost of capital due to declining risk perception.
Further, in some countries, bids have become increasingly competitive due to expected low operating costs in locations with excellent solar resources and, in some cases, the necessity to compete with low wholesale electricity prices. Downward pressure on prices and slim margins made 2017 another challenging year for many solar manufacturers and developers, causing further consolidation in the industry, observed the report.
In India, solar PV bid prices fell to new lows in early 2017, due to intense competition caused by slowing demand, and to the expectation that module prices would continue to fall. Record-low winning bids brought the price of new solar PV to half that of new coal and even below that of existing coal plants, leading to the suspension or cancellation of tenders for new coal capacity. However, high demand in China and the United States, coupled with a reduced supply of polysilicon in China, made it difficult to secure solar panels and pushed up prices in India from May 2017 onwards.
In discussing the spectacular year for solar in India, the report also made a cautionary note stating that renewables are losing their share in the global energy mix as booming economies and rising populations drive a soaring demand for power.
The report highlighted that the energy demand grew by 2.1 percent and energy-related carbon dioxide emissions were up by 1.4 percent in 2017, a substantial rise for both for the first time in four years. Renewable energy uptake has been unable to keep up in the face of continuing investment in fossil fuel and nuclear capacity, it said.
Mercom previously reported that renewable energy capacity additions accounted for 20.32 percent of India’s capacity mix at the end of financial year (FY) 2017-18. This is a substantial increase from the previous 17.5 percent share reported at the end of FY 2016-17, mainly due to the growth in solar.
The emerging economies account for a large share – approximately 63 percent – of the overall investment into the market, with China alone making up 45 percent, according to the report.
Earlier, a United Nation’s report highlighted that developing countries increased their renewable energy investments by more than $74.3 billion to $177.1 billion in 2017.
An Energy Economics and Financial Analysis (IEEFA) report recently listed 14 of the largest under-construction utility solar projects in the world, of which five are located in India. These are: Bhadla Industrial Solar Park (2,225 MW), Pavagada Solar Park (2 GW), Ananthapuramu – I Solar Park (1.5 GW), Kadapa Ultra Mega Solar Park (1 GW), and Rewa Solar Park (750 MW).
Recently, Mercom reported about China’s plans to impose installation caps and reducing the feed-in tariff (FiT) for its solar projects. In 2017, China was the largest solar market in the world with 53 GW of solar installed. Due to the sheer size of the market, any major policy changes will impact not only China, but the rest of world in 2018.
Image credit: Azure Power