RENEWABLE ENERGY

WHITEPAPER
SOLAR PV IS SCALING UP,
WIND NEEDS TO CATCH UP –
1H 2022 REVIEW
EXECUTIVE SUMMARY

By end of year, about 300 GW of

PV and wind set to be commissioned
Rystad Energy estimate 76 GW of solar
PV capacity broke ground in 1H 2022.
Grid operators are in for a busy period,
with 130 GW of utility PV expected to
complete commissioning this year. More
than half this capacity to be energized is
in China, India and the US. Rooftop PV
market will join the race, expected to
exceed 100 GW of installations in 2022,
driven by commercial and industrial (C&I)
solar in Asia-Pacific (APAC).
China and Europe will lead wind
installations in 2022 as 55 GW of wind
capacity breaking ground in 1H 2022, and
106 GW of wind projects are expected to
complete commissioning this year,
including 96 GW of onshore wind.
Notably, utility solar PV is expected to far
outstrip wind power in terms of annual
commissioning this year.
Offshore wind, meanwhile, faces a
decisive year, with Europe back on a par
with China and a record amount of
capacity to be awarded in 2022.
For both wind and solar, despite
increasing cost, utility power purchase
agreements (PPAs) remain attractive,
with rising volumes and prices signed.

Solar PV and wind capacity commissioned each year by energy source

Gigawatts (GWAC)

350 Residential PV

C&I PV
300
Utility PV

Onshore wind
250
Offshore wind

200

150

100

50

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

*Includes 2H 2022 forecast,

Source: Rystad Energy RenewableCube

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SOLAR REVIEW

Size of utility PV facilities increases

For the first half of the year, 76 GW of utility
PV broke ground led by growth in Asia and
North America. This represents a 52% boost
from 1H 2021 when 50 GW of utility PV
broke ground. The top three markets in 1H
2022 were China, the US and India, which
together accounted for 70% or 53 GW of the
new utility PV capacity to break ground.
The size of the facilities varies dramatically
across continents. In Europe more than 50%
of the utility PV capacity to start construction
is less than 50 MW, geographically divided
between smaller facilities in central and
western nations (Germany, UK, France) and
larger facilities in the east (Poland/Romania).
In the US, facilities greater than 300 MW
now make up more than 30% of the installed
capacity, up from 15% in 2021.
However, the largest shift in facility size has
been seen in APAC. Markets in this region,
such as China, India and Australia, favor
projects greater than 300 MW and benefit
from economies of scale while also
connecting to less congested higher voltage
transmission lines. This year is the second in
a row when more than 40% of utility PV
capacity installed in APAC will comprise of
facilities greater than 300 MW.

Utility PV capacity by construction start year and continent

Gigawatts (GWAC)

180
Asia

160 North America

Europe
South America
140
Africa
Middle East
120 Australia

100

80

60

40

20

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022*

*Includes 2H 2022 forecast,

Source: Rystad Energy RenewableCube

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SOLAR REVIEW

More utility PV PPAs signed despite

cost and logistics challenges
Utility PV capital expenditure (capex) has
spiked 21% to $0.98/Wp from 2020 pandemic
lows of $0.81/Wp.
The most significant component of this cost
hike is the inflation-impacted module, which
has increased in price from $0.21/Wp in 2020
to $0.28/Wp in 2022.
However, other hardware (inverters/ mounting
structures) has also seen cost inflation as
commodity/ energy costs rise. Furthermore,
shipping costs remain elevated at $0.02 to
$0.03/Wp – a substantial boost to pre-
pandemic levels of $0.005/Wp. The higher
capex has flowed through to the PPAs being
signed, which have either remained flat or
increased (Y-o-Y) in price to compensate for
more expensive projects.
Despite the higher price tag for utility PV over
the past 18 months, power purchase
agreements (PPAs) continue to be inked. In the
first five months of 2022, 13 GW of utility PV
PPAs were signed, up from 8 GW over the
same period in 2021

Utility PV capex by economic detail

USD per W DC
Other development and project
$1.4 management
Array cable installation

Preliminary studies

$1.2 Area acquisition

Export cable installation

Connection application
$1.0
Logistics

Development application

$0.8 Export cable

Array cable

Onshore substation
$0.6
Shipping

Engineering
$0.4 Additional BOS
$0.69
Site preparation
$0.52
Inverter
$0.2 $0.38
$0.32 $0.28 Mounting structure
$0.24 $0.26
$0.21
Solar installation
$-
Solar PV module
2015 2016 2017 2018 2019 2020 2021 2022

Source: Rystad Energy RenewableCube

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SOLAR REVIEW

About 130 GW of utility PV to complete

commissioning in 2022
By end of year, 130 GW of utility PV will
complete commissioning. The largest three
markets, China, India and the US, account for
62% of the capacity to complete
commissioning (80 GW) in 2022.
With increased generation comes increased
risk of curtailment. Solar PVs coordinated and
nonsynchronous generation creates difficulties
for grid operators due to the reduction in
system strength (voltage signal), inertia
(frequency management) and creates greater
need for ramping of dispatchable capacity
around the generation profile of solar. Whilst
these issues will be a global challenge for grid
operators, they will be prevalent in APAC
nations where grids are less interconnected,
dispatchable capacity is less flexible and has a
higher minimum turndown compared to other
continents.
For grids less able to accommodate the new
PV generation, the solution is typically
curtailment which is already common in
locations such as Australia, Vietnam and
China.

Utility PV capacity commissioned each year by continent

Gigawatts (GWAC)

140
Asia
North America
120 Europe
South America
Africa
100 Middle East
Australia

80

60

40

20

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022*

*Forecast capacity commissioning,

Source: Rystad Energy RenewableCube

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SOLAR REVIEW

Tailwinds for rooftop PV economics

as retail electricity prices rise
The rooftop PV market is expected exceed 100
GW of installations in 2022. Rooftop PV’s
adoption does not suffer the same transmission
constraints as utility PV, as it is placed at the
source of consumption. Its uptake is
determined by local economic factors (capex,
electricity rates etc), local incentives (grants
and feed in tariffs) and roof availability
(shading, structural, orientation, ownership
etc).
The rise of coal and gas prices over the past
18 months will flow through to retail electricity
prices and improve rooftop solar economics,
and thus increase short-to-medium term
demand.
APAC is the largest market, expected to
account for 70 GW in 2022. Capacity will be
split 40% residential (<15 kWDC) and 60% C&I.
Residential solar in APAC will be concentrated
to China and Australia, whilst C&I is more
diversified across the continent. In the
Americas, the US and Brazil are expected to
be the largest markets accounting for over 14
GW DC. Europe’s largest markets are expected
to be Germany, Poland, the Netherlands, and
Spain. However, the key unknown is how
strongly European governments will incentivize
consumers to install rooftop PV as one of the
potential short-term solutions to reduce gas
and coal demand for power

Rooftop PV annual installed/ forecast capacity by continent

Gigawatts (GWDC)
120 North America
Middle East
Europe
100
Central / South America
APAC
80 Africa

60

40

20

0
2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Source: Rystad Energy RenewableCube

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 WIND REVIEW

Over 50 GW of wind capacity broke

ground in 1H 2022, more than
80 GW lined up for the second half
Led by growth in Asia and Europe, 55 GW of for 46 GW, up by 10% compared to first half
wind energy projects broke ground in 1H of 2021, against 5 GW for offshore wind.
2022, which represents a 10% year-on-year
The top three markets over the period have
boost compared to 1H 2021. According to
been China, the US and Germany, which
the current project pipeline, the second half
together accounted for 62% of the new wind
of this year will better reflect the global boom
capacity to break ground. In addition, China
for wind energy, as 85 GW of capacity is
and the UK continue to lead offshore wind
lined up to start construction.
development, accounting together for 75%
Of the total capacity that broke ground over of the new capacity under construction.
the past six months, onshore wind accounts

Wind capacity by construction start year and continent

Gigawatts (GW) 2022

140 Russia
1H 2022
Africa 39%
120 Middle East
Australia 140
South America GW
100
North America
Europe Forecast 2H 2022
80 61%
Asia

60
Offshore wind
10%

40

140
20 GW

0
Onshore wind
90%

*Includes 2H 2022 forecast,

Source: Rystad Energy RenewableCube

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 WIND REVIEW

Wind project size inflated

by larger turbines
Small-scale projects continue to drive growth reached percentage of projects of this size.
in Europe, with over 50% of the onshore wind
China obviously leads the way, but India and
capacity due to start construction in 2022
Australia also contribute significantly to the
being below 50 MW. However, unlike
addition of new large-scale projects. In terms
countries like Germany, Spain, and France,
of capacity size, North America has the most
we have seen the Nordic and Eastern
balanced construction portfolio, initiating
European countries offering more land for
construction on projects of all sizes above
larger facilities. Meanwhile, in the APAC
100 MW in a similar proportion. As a global
region, developers aim to achieve economies
trend, the size of projects is growing,
of scale by favoring larger facilities, relying
supported by an increase in the size of
on more available land and simpler
turbines: 40% of the turbines lined up for
permitting policies than in Europe. This year,
projects starting construction in 2022 have a
38% of capacity to start construction is more
capacity between 4 and 6 MW, compared to
than 500 MW across APAC, a never-before
7% in 2018.

Onshore wind capacity by asset size, region and construction year

Percentage of new capacity under construction by asset size

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022
North America APAC Europe

0-50 MW 50-100 MW 100-200 MW 200-300 MW 300-400 MW 400-500 MW > 500 MW

Source: Rystad Energy RenewableCube

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 WIND REVIEW

With 106 GW to be commissioned in

2022, wind to be overtaken by PV
In 2022, 106 GW of wind projects are
expected to complete commissioning,
divided between 96 GW of onshore wind and
10 GW of offshore wind. The three largest
markets remain China, the US and Germany,
together accounting for 61.6 GW of the new
global capacity set for commissioning.
Slowed down by supply chain bottlenecks
and delays throughout the wind industry, only
34.4 GW has been commissioned in the first
half of 2022 and most projects will be added
to the grid in the second half of the year.
For the first time, utility solar PV is expected
to far outstrip wind power in terms of annual
commissioning, reaching 130 GW of new
installed PV capacity this year. This
illustrates the shift from wind power to the
cheaper and more flexible solar PV energy.
However, the wind industry could catch up,
with some regions such as Europe aiming to
accelerate the development of renewables
by 2023. The introduction of adequate
incentive mechanisms and improved
permitting policies will be key to achieving
this ambition.

Global wind capacity to be commissioned annually by continent

Gigawatts (GW)

120
Russia 1H 2022
Africa 39%

100 Australia
Middle East
106
140
GW
South America
80 North America
Forecast 2H 2022
Europe
61%
Asia
60

Offshore wind
40 9.5%

106
20
GW

Onshore wind
0 90.5%

*Includes 2H 2022 forecast

Source: Rystad Energy RenewableCube

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 WIND REVIEW

Rising commodity prices hit

turbine and foundation costs
Annual capital investments in wind energy
are expected to reach $175 billion by end of
2022, split between onshore wind and
offshore wind.
During the first half of the year, $79 billion
has been invested globally, representing a
10% year-on-year growth compared to 1H
2021.
Despite growing annual investments, the
impact on capacity development remains
limited due to the cost inflation observed
since last year. After years of decline,
onshore wind capex has increased by 9%
since 2021 to $1.43/W (excluding shipping
costs). This year-on-year increase is mainly
due to the rising steel prices that have hit
onshore wind projects – as the cost of steel
accounts for almost 70% of the final price tag
of wind installations.
The turbine, a major cost component of a
wind project, has increased in price from
$0.90/W last year to $0.98/W in 2022.
However, the foundation appears to be the
component with the highest cost increase,
recording an 18% of year-on-year spike.

Onshore wind capital expenditure by economic detail

USD per watt

$1.8

$1.6

$1.4

$1.2 Other development

costs
Other material costs
$1.0

Engineering
$0.8
Array cable
$0.6 $1.19
$1.10 $1.09 $1.09 Foundation
$1.02 $0.98
$0.94 $0.90
$0.4
Turbine

$0.2

$0.0
2015 2016 2017 2018 2019 2020 2021 2022

Source: Rystad Energy RenewableCube

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 WIND REVIEW

A crucial year for offshore wind,

bringing Europe up to China's level
Although global offshore wind capacity
installations are expected to fall to around 10
GW this year, 2022 will be a key milestone
for global offshore wind development.
After being far-surpassed last year, we
expect Europe to make a comeback in 2022
and reach China's level with a record-
breaking installation of 4.2 GW of new
capacity. With three large-scale plants, the
UK is anticipated to break its own record by
contributing more than 3 GW to this year’s
capacity. In addition to China, Vietnam,
Japan, and Taiwan are ramping up the
development of renewables in Asia, aiming
to install over 2 GW by 2022.
The future background of offshore wind will
be better-defined this year, as an exceptional
level of capacity is being auctioned in 2022.
The first half of 2022 has already seen 26.4
GW awarded, driven by the 25 GW
ScotWind tender (UK).
Further, a similar amount of offshore wind
capacity is anticipated to be awarded by the
end of the year, led by record auctions in the
US, Japan, and several European tenders.

Annual offshore wind capacity additions Top 10 projects expected to start up in 2022
Gigawatts (GW) Megawatts (MW)

18
North America
Hornsea Two, UK
16 Asia ex. China
Moray East, UK
Europe
14
Triton Knoll, UK
China
12 Changhua 1, Taïwan

10 Jiazi OSW Phase I, China

Saint-Nazaire, France
8
Cangnan 4# OSW, China
6
Jiazi OSW Phase II, China
4
Formosa 2, Taïwan
2 Kaskasi, Germany

0 400 800 1,200

2017 2018 2019 2020 2021 2022*

Source: Rystad Energy RenewableCube

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 PPA REVIEW

PPA prices – the silver bullet?

As rising capital costs threaten to reduce the
economic attractiveness of wind power,
developers are turning to PPAs to financially
secure projects.
Offtakers are also more willing to accept
higher prices as power prices are increasing.
During the first half of 2022, 7.1 GW of wind
power PPAs were signed, compared to 6.4
GW in the same period of 2021.
As an average, PPA prices signed in 2022
for wind projects starting up in 2023 have
increased by 15% year-on-year, allowing
developers to offset rising project costs.
The capex increases have also flowed
through to solar PPAs being signed, which
have either remained flat or increased in
price year-on-year to compensate for more
expensive projects.
However, despite price rises for utility PV
over the past 18 months, PPAs continue to
be signed.

Utility PV asset PPA price by continent

USD per megawatt-hour (MWh)

North America

APAC
100

Middle East

South America

Europe

Africa

10
01-Jan-13 01-Jan-15 01-Jan-17 01-Jan-19 01-Jan-21 01-Jan-23

Construction start date

Note: Prices for PPAs signed in 2022 are reflected in assets where construction will start in 2023-2025.
Source: Rystad Energy RenewableCube

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Contacts

Gero Farruggio
Partner, Head of Australia & Global Renewables
gero.farruggio@rystadenergy.com

Craig Jamieson
VP Commercial – New Energies
craig.jamieson@rystadenergy.com

Matthew Watson
Partner, Head of Head of Global Sales
matthew.watson@rystadenergy.com

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