This year, some of these trends are evolving to a new stage in the energy transition sector from an ongoing supply chain disruption, shifting renewable energy procurement goals, and a global energy crisis that took hold in 2022.
After two years of feeling the effects of tightened supply chains, raw materials and shipping costs are declining in 2023. Global shipping costs have lowered to pre-pandemic levels. However, S&P Global says this cost relief won’t immediately translate to lower coverall capital expenditures for renewable energy projects.
The main hindrance for the industry according to S&P Global had been land access and grid connection; leading to an unintended consequence of driving up development costs, as investors rush to deploy capital in markets where there is insufficient interconnection availability, and investors are willing to pay premiums for faster, construction-ready projects.
Another change pushing prices upward is the shortage of skilled workers, causing an increase in construction labour costs. This, along with a rising cost of capital, will likely prevent any noticeable price declines in project capex in the near term.
Note worthwhile is the PV module prices that have fallen faster than expected in early 2023, as polysilicon supply becomes more abundant. This relief will likely trickle down to module prices, though it is expected to be offset by manufacturers looking to recover margins.
Further down the value chain, installers and distributors are expected to increase their margins. S&P says this will likely lead to less cost relief benefits to rooftop solar end-users, while utility-scale developers will benefit from lowered costs more.
In 2022, distributed solar consolidated its position as a mainstream electricity supply option in many established markets. In 2023, S&P Global expects the technology to spread to new consumer segments and gain ground in new markets. New types of households and small businesses will gain access as shared solar options become available, and PV systems are expected to increasingly be attached with energy storage.