A new report by Bloomberg Intelligence (BI) has predicted solar energy to be the fastest-growing sub-segment of the energy sector in 2023, with demand set to soar 25-30 percent to $220 billion.
In its Global Solar Energy 2023 Outlook, BI sees growth in solar demand surpassing 20 percent in 2023-25 with industry wide revenue for the companies in BI’s global solar theme basket on track to exceed $220 billion in 2023.
“We expect 2023 revenue to increase the quickest at inverter manufacturers and equipment suppliers. Sales at Enphase are expected to be up 35 percent in 2023 and 29 percent at SolarEdge,” BI said.
The report found that global solar demand rose about 40 percent in 2022 with industry revenues increasing about 50 percent.
“Such fast top-line growth could be one of the factors that helped buoy solar share prices this year relative to the overall market,” the report added.
While solar shares have outperformed the broader market so far this year, Bloomberg Intelligence found that most solar shares are still well below their record highs in the first quarter of 2021.
Read also: We will raise power distribution to 20,000MWTs in 4 years – Obi
Unlike nuclear power, the cost of installing solar is likely to get cheaper in the future as efficiencies improve and manufacturing expands.
This follows the International Energy Agency announcing it expects solar energy to surpass coal power by 2027 as the energy crisis and war in Ukraine drive a shift to renewables.
The IEA believes renewable energy will become the largest source of global electricity generation by early 2025 and the world will add twice as much renewable capacity from 2022 to 2027 as in the previous five years.
Rob Barnett, BI Senior Analyst (Clean Energy) added, “the growth of solar follows a record 2022, during which global solar capacity additions expanded about 47 percent”.
“Best-in-class peers such as Enphase or First Solar could see their sales growth exceed 30% in 2023, and amid such fast line growth, we believe profitability metrics are poised to improve based on an easing of input costs and supply chain constraints,” Barnett said.
Following successful 2021-22 battery-storage rollouts, BI expects the coming year could be a banner one, with Canadian Solar, SolarEdge and Enphase expected to have delivered a cumulative 10 gigawatt-hours of batteries in total.
Bloomberg Intelligence stated double digit growth is fuelled by favourable economics: a new solar system’s levelised cost of electricity (the average cost of an electron produced by a specific power plant over the life of the asset) is about $40 a megawatt hour, roughly in line with a new wind plant and over 50% cheaper vs a new coal one.
Unlike nuclear power, the cost of installing solar is likely to get cheaper in the future as efficiencies improve and manufacturing expands.
European policy support for solar is also strong with the European Commission’s REPowerEU plan aiming to double the installed capacity of solar power to more than 320GW by 2025, which may lift consensus sales estimates for 2023-25.
