Renewables 2019

Market analysis and forecast from 2019 to 2024

Renewables 2019 is the IEA market analysis covering the key developments in renewable energy in 2018 and forecasts from 2019 to 2024. It provides global trends and developments for renewable energy in the electricity, heat and transport sectors.

Distributed solar PV: in this section

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Forecast overview

Globally, distributed solar PV capacity is forecast to increase by over 250% during the forecast period, reaching 530 GW by 2024 in the main case. Compared with the previous six-year period, expansion more than doubles, with the share of distributed applications in total solar PV capacity growth increasing from 36% to 45%. Commercial and industrial systems remain the largest growth segment because they are usually more inexpensive and have a relatively stable load profile during the day that can enable larger savings on electricity bills, depending on the policy scheme in place.

	Commercial/industrial	Residential	Off-grid	% of distributed in total PV (right axis)
2007-12	44	19	1	69.00
2012-18	103	36	3	35.99
2019-24	227	85	5	45.36
2019-24 accelerated case	285	114	7	46.33
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Of all renewable technologies, additional growth potential is highest for distributed PV because consumer adoption can be very rapid once the economics become attractive. Distributed PV growth could therefore be almost 30% higher in the accelerated case, assuming: 1) faster investment cost reductions, especially in countries where BoS costs remain high; 2) clarification of regulatory and incentive schemes in multiple markets, especially concerning remuneration and the length of self-consumption accounting periods; 3) the reduction of non-economic barriers such as protracted application processing, high connection fees and unjustified deployment caps; 4) access to affordable financing, especially in emerging economies; 5) speedy implementation of retail market reforms, enabling more cost-reflective electricity pricing for residential and commercial users.

Distributed PV remuneration schemes

Renewables 2019 categorises distributed solar PV remuneration schemes into five main categories: 1) buy-all, sell-all; 2) net metering; 3) real-time self-consumption at the wholesale price; 4) real-time self-consumption at a value-based price (usually between the wholesale and retail price), whereby utilities or regulators estimate the value of PV generation based on avoided generation capacity expansions, fuel expenditures and any additional costs, and on benefits to the system or society (grid integration costs, CO2 reduction value, capacity credits, etc.); and 5) real-time self-consumption at zero remuneration.

Distributed PV remuneration for forecast growth, 2019-24
	Buy-all, sell-all	Net metering	Wholesale	Value-based	No rem.
Residential	37.63765397	30.87297604	1.178464037	13.9104934	0.203230304
Commercial	58.73764498	31.43524742	4.982465519	128.7232186	2.292953722
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	Buy-all, sell-all	Net metering	Wholesale	Value-based	No rem.
Europe	7.581851981	11.45474669	3.160992522	25.80267484	0.669
North America	0.090094781	31.40578381	1.673949781	1.452470401	0
Latin America	0	5.25311	0.03566	0	0.01783
Asia-Pacific	26.12744319	10.76811297	1.124327253	19.95871544	1.13357085
China	59.2	0	0	94.8	0
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Note: In buy-all, sell-all schemes, all PV generation is remunerated with a fixed tariff that can be higher or lower than the retail rate. No rem. = no remuneration of excess genera

The use of these schemes to increase distributed PV deployment varies by segment and region. Over 80% of residential growth during 2019 24 will be from buy-all, sell-all schemes or net metering, mainly in the United States and China. Conversely, the main driver for commercial growth is self-consumption in real time, largely because of the good match between electricity demand and peak PV production at midday.

Value-based tariffs cover 30% of distributed PV growth up to 2024, especially driven by commercial systems in Europe and residential systems in Australia. Most US states, some countries in Europe, and relatively nascent markets such as Latin America and the Caribbean, India and Association of Southeast Asian Nations (ASEAN) economies are still implementing net-metering schemes that remunerate excess generation with retail tariffs.

Residential solar PV forecast

Residential solar PV capacity expands from 58 GW in 2018 to 143 GW in 2024, and annual capacity additions are expected to more than triple to over 20 GW by 2024. China’s residential PV growth is forecast to accelerate substantially compared with the previous six years. As a result, the country registers the largest installed residential solar PV capacity in the world by 2024 thanks to FITs under the buy-all, sell all model, surpassing the European Union, the United States and Japan.

	2013 2018	2019-24 main case	2019-24 accerlerated case
China	1.46	35	49
North America	11.73067828	19.64495617	22.87270353
Europe	12.08539826	13.02553465	17.91108941
Asia-Pacific	9.70260953	11.89856634	17.02856634
Others	0.65926624	2.171557147	3.849531485
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The United States is the second-largest growth market after China, with expansion driven by federal tax incentives and annual net-metering schemes in many states (Figure 2.15). In addition, California’s new mandate requiring PV panels on new homes and buildings of up to three storeys after 2020 contributes to growth.

Australia and Japan lead Asia Pacific deployment, while growth continues to be limited in India and other emerging and developing countries due to minimal policy incentives, the absence of regulations (or their inadequate implementation), and low, cross-subsidised residential electricity tariffs, making the economics unattractive. In Latin America, residential expansion is expected to accelerate because of new net-metering and self-consumption policies in Brazil, Chile and Argentina.

Commercial industrial solar PV forecast

Commercial and industrial solar PV capacity is forecast to expand from 150 GW in 2018 to 377 GW in 2024, with annual capacity additions increasing by 50% to 44 GW in 2024. China remains the largest growth market, but unlike for the residential segment, expansion in the Asia Pacific region is larger than in Europe and North America, mainly owing to strong policy incentives in Japan, Korea and India.

In the European Union, commercial PV growth in the main case forecast accelerates compared with the previous six-year period, thanks not only to sustained deployment in Germany but also to emerging growth markets such as France, the Netherlands and Spain as a result of improved policy environments.

	2013-18	2019-24 main case	2019-24 accelerated case
China	46.81	119	136.5
North America	10.06016043	15.0411976	17.3661976
Europe	14.55204634	37.00582347	51.98637231
Asia-Pacific	29.81616236	47.21360336	67.29160336
Others	1.850753654	6.144856344	9.0515865
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