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Against a backdrop of massive installations and evolving metrics, the IEA-PVPS Trends Report 2024 summarises significant changes in PV deployment worldwide, reflecting the evolving role of PV in energy systems and underlining its ability to meet global demands. The association explores the trends identified in the report, highlighting milestones, regional dynamics and the implications of increasing PV penetration on energy networks around the world.
The global PV industry has seen massive growth in 2023, with record installation volumes reported throughout the year and even more projected for 2024, according to the “ Trends in PV Applications 2024 ” report published by IEA-PVPS.
Record-breaking photovoltaic installations and dominant market in China
China has led this expansion, installing a staggering amount of PV capacity to absorb its manufacturing surplus. Chinese installations alone account for more than 60% of global PV deployment, a reflection of the country’s aggressive investment in renewables as well as its manufacturing capacity to meet domestic and international demand. The report notes that while China is making great strides, other regions are experiencing relatively modest growth, underscoring the concentration of PV power generation in the Chinese market.
Other regions, notably the United States and the European Union, have also seen significant progress, although their rates remain lower than China’s. EU countries such as Germany, Spain and the Netherlands are making notable strides, but are still nowhere near the scale of China’s efforts. These regional variations reflect differences in the political support, market demand and logistical challenges each region faces in expanding PV installations.
Inconsistencies in global PV metrics and capacity estimation
One of the issues highlighted in the report is the lack of a unified approach to measuring PV capacity worldwide. Different standards and methodologies, particularly in AC/DC conversion ratios, off-grid volumes and undeclared systems, lead to estimation discrepancies between regions.
And in some cases, this discrepancy can be large enough to cause serious measurement ambiguities. In China, for example, the volume of capacity derived from centralized AC/DC conversion uncertainties is nearly equivalent to the total installations of the entire EU and larger than that of the United States. This discrepancy underscores the need to improve the standardization of PV reporting practices in order to ensure accurate global comparisons and market forecasts.
Overcapacity and falling prices: Navigating market instability
The explosive growth in PV manufacturing has also created excess capacity, leading to a substantial decline in PV prices, a trend that has persisted throughout 2024. While this excess capacity benefits consumers by making PV systems more affordable, it has also placed a financial burden on manufacturers.
Chinas overcapacity has intensified competition, particularly in the EU, where prices have fallen sharply due to the surplus of Chinese products destined for the European market after meeting domestic demand. The US and India have to some extent protected their markets from this impact through protective measures, highlighting the disparities in the openness and competitiveness of the PV market.
Furthermore, manufacturers around the world, including those in Europe and China, are increasingly struggling as older production lines become less competitive in the current market landscape. Many manufacturers are choosing to pause or close older production lines, cutting operating costs in response to thin profit margins. This consolidation reflects the maturity of an industry where only the most efficient manufacturing lines remain operational, pushing companies towards technological innovation and cost efficiency.
Growth of distributed photovoltaics and improved grid efficiency
The report indicates that more than 40% of PV installations are distributed systems located directly at the point of consumption, minimising energy loss compared to centralised energy sources. The distributed nature of PV allows it to effectively serve local communities, reducing transmission and distribution losses in power grids.
For this reason, PV is projected to account for 8.3% of global electricity consumption in 2024, up from 5.4% of total production in 2023, highlighting the efficiency of PV in delivering electricity to consumers with minimal losses. This distributed configuration means that PV is well placed to meet the world’s growing energy needs with greater efficiency.
The increase in photovoltaic penetration and the shift from marginal to base energy
More and more countries are achieving high levels of PV penetration, with approximately 20 countries having penetration rates above 10%. This shift indicates that PV is moving from being a supplementary energy source used primarily for peak demand to becoming a reliable source of baseload energy.
The implications of this shift are substantial: PV is no longer just a means of offsetting peak electricity demand, but is displacing traditional methods of baseload generation, reshaping power grids and influencing energy policy and market dynamics.
Environmental impact and CO2 avoidance
Reflecting the changing role of PV in power grids, the report’s methodology for calculating avoided CO2 emissions has evolved. Whereas in previous years PV was seen as offsetting peak power, it is now increasingly seen as a substitute for baseload power. This adjustment in methodology reflects the greater impact of PV in high penetration countries, where it offsets a significant portion of baseload power, rather than merely supplementing peak demand.
However, it is important to stress that the CO2 reduction estimates in the report are not definitive studies. Rather, they serve as an illustrative guide for policymakers, industry operators and end-users who want to understand the role of PV in reducing emissions and meeting climate goals.
Conclusions: Shaping the future of global photovoltaic markets
The 2024 Trends Report provides valuable insights into the transformation of PV from a marginal energy source to an essential component of national energy systems around the world. Rapidly increasing installations, particularly in China, underscore the need for unified capacity reporting standards and raise questions about market stability amid manufacturing overcapacity and fluctuating prices. As more countries adopt PV on a large scale and its role in baseload power supply increases, the environmental and economic contributions of PV continue to grow.
For market participants, policy makers and end users, these insights highlight both the immense potential of PV and the strategic choices needed to sustain its growth and integration into global energy systems. |
