Every hour, the Earth receives enough energy from the sun to cover the world’s entire annual energy consumption needs.1 This fact provides excitement about continued advancements in solar photovoltaic (PV) technology as it gets better at converting the sun’s rays into electricity and is increasingly used around the world.
Solar PV is a highly scalable, cost competitive, and renewable power source that can be utilized in a wide variety of ways and locations. In the coming years, we expect advancements in solar modules and related technologies to support strong growth in solar power capacity and generation and create compelling investment opportunities throughout the energy transition.
We expect solar power to expand more than any other power source over the next decade, accounting for more than half of total electricity capacity additions between 2022 and 2032.3 Solar power is one of the cleanest energy sources given that PV systems have short carbon payback periods and can produce energy with zero greenhouse gas emissions for up to 30 years.4
It’s one of the reasons why governments around the world have made solar power adoption a priority through tax credits, subsidies, and solar power project tenders and auctions.
For example, in the U.S., the Inflation Reduction Act includes incentives aimed at building out a domestic solar equipment supply chain and encouraging solar power growth.5 Globally, corporations are also increasingly developing solar power projects or buying solar power through power purchase agreements to meet sustainability goals.
Helped by such public and private sector support, we forecast global solar power capacity to increase from 991 gigawatts (GW) in 2022 to 3,322GW in 2032, with a compound annual growth rate (CAGR) of 11.6%.6
Subsequently, solar’s share of total global power generation is forecast to rise from 3.4% to 10.9% over that period.7 Historically, solar power capacity growth has been strongest in China, the U.S., and the European Union, and we expect these regions will remain leaders over the next decade.
The solar power sector’s increasing cost competitiveness against traditional power sources is also critical to its growth potential. Between 2010 and 2021, the global weighted levelized cost of electricity (LCOE) for utility-scale PV projects fell by 88%.8
The steep decline resulted from the development of more powerful, durable, and efficient solar panels, as well as improvements to inverters, racking, and tracking components. Companies improving manufacturing processes and economies of scale leading to more efficient installation processes also played a role in price declines.
Supply chain issues and elevated shipping and polysilicon prices caused the price decline trend for certain projects to reverse in 2021 and 2022, and solar power project costs are likely to remain elevated into 2023.9 However, solar remains highly cost-competitive, with its competitiveness even improving due to increases in natural gas and coal prices.10
Enhanced solar PV technology can make solar power an even more viable option within a larger number of countries, supporting the potential for widespread growth amid climate change mitigation and adaptation efforts. For example, the solar industry is working towards more powerful and ultra-high efficiency solar modules with higher outputs.
Solar modules now have power ratings well over 600W for utility-scale projects and 400 watts (W) for residential projects.11 Efficiency is also improving, with modules now reaching efficiencies of over 22.5%.12 For context, five years ago the leading solar modules had a power rating of 385W and efficiencies of 16% to 19%.13,14 These latest modules can lead to better project performance and lower costs by reducing the number of modules needed in a project.
Key to the next generation of modules are advancements in solar cell technologies such as multi-junction cells, tandem cells, thin film cells, and interdigitated back content (IBC) solar cells, which can boost performance and lower costs.15,16
Additionally, solar modules built from new materials, such as perovskite, could be bigger, cheaper, and more efficient than those made from silicon.17 P-type and n-type cells are readily available, with the market’s shift towards n-type cells well underway, and IBC and tandem silicon perovskite cells could reach mass production by the end of the decade.18,19
Elsewhere along the solar value chain, manufacturers continue to improve tracking and mounting systems, which creates opportunities for PV system installation on historically difficult, unsuitable, and high-cost terrain, such as landfills, hilly landscapes, active agricultural land, and even bodies of water.
While tracking systems can lead to higher upfront costs than traditional fixed-tilt systems, they can also cut costs by removing the need to flatten terrain, expanding suitable land area, and reducing labor costs associated with installation.
Increasing digitalization through machine learning, advanced analytics software, data-driven failure prevention technology, and automated vegetation management can also help reduce costs. Potential cost benefits span the early design stages to installation and operation and maintenance (O&M). Digitalization can help better integrate solar PV systems into energy grids, boosting profitability and durability.20
Additionally, ongoing policy efforts to streamline permitting in many countries should have a positive impact on future solar power prices and growth of the technology. Notably, soft costs, such as permitting, installation labor, and operation and maintenance costs, now make up the largest share of solar PV project costs given the decline in hardware prices.21
In 2022, leading solar module manufacturers continued to make strides towards the next generation of powerful and ultra-high efficiency modules that we expect will lead to price declines and strong solar power growth.
The sun’s abundance has the world finally turning to it for clean energy on a massive scale. Advancements in solar PV technology are increasingly expanding the suitability range for solar power, and projects now range in size from a few kilowatts (kWs) for residential systems to more than 1,000GW for the largest utility-scale systems.
We expect further advancements in technology to increase solar energy’s capabilities while making it cheaper to do so. As an intermittent power source, solar power isn’t perfect. However, we expect advancements such as the continued development of solar plus storage hybrid projects to help boost grid reliability, and in the process support the industry’s significant long-term growth potential.
RAYS: The Global X Solar ETF seeks to invest in companies positioned to benefit from the advancement of the global solar technology industry. This includes companies involved in solar power production; the integration of solar into energy systems; and the development/manufacturing of solar-powered generators, engines, batteries, and other technologies related to the utilization of solar as an energy source.
CTEC: The Global X CleanTech ETF seeks to invest in companies that stand to benefit from the increased adoption of technologies that inhibit or reduce negative environmental impacts. This includes companies involved in renewable energy production, energy storage, smart grid implementation, residential/commercial energy efficiency, and/or the production and provision of pollution-reducing products and solutions.
Click the fund name above to view current holdings. Holdings are subject to change. Current and future holdings are subject to risk.
1. National Renewable Energy Laboratory (NREL). (n.d.). Solar Energy Basics. Accessed on December 15, 2022.
2. Global X ETFs Analysis derived from variety of sources. See ‘Forecast Analysis Derived from the Following Sources’ footnote below for full list.
4. Walker, E. (2022, December 12). How long do solar panels last? Solar lifespan explained. EnergySage.
5. The Inflation Reduction Act of 2022, H.R. 5376, 117th Cong. (2022).
6. Global X ETFs Analysis derived from variety of sources. See ‘Forecast Analysis Derived from the Following Sources’ footnote below for full list.
8. International Renewable Energy Agency (IRENA). (2022, October 10). Renewable Power Generation Costs in 2021.
9. International Energy Agency (IEA). (2022, May 10). Renewable Energy Market Update – May 2022.
11. Svarc, J. (2022, July 19). Most Powerful Solar Panels 2022. Clean Energy Reviews (CER).
12. Svarc, J. (2022, July 28). Most efficient solar panels 2022. Clean Energy Reviews (CER).
13. Svarc, J. (2022, July 19). Most Powerful Solar Panels 2022. Clean Energy Reviews (CER).
14. Pickerel, K. (2018, October 1). What are high-efficiency solar panels? Solar Power World.
15. Svarc, J. (2022, July 28). Most efficient solar panels 2022. Clean Energy Reviews.
16. Korea Times. (2022, October 14). Hanwha Q Cells plans to mass-produce perovskite tandem cells by 2026. Perovskite-info.
17. Okinawa Institute of Science and Technology. (2021, January 27). Game-changer in future solar technology: New perovskite solar modules with greater size, power and stability. SciTechDaily.
18. Yamaguchi, M., Dimroth, F., Geisz, J, F., & Ekins-Daukes, N, J. (2021). Multi-junction solar cells paving the way for super high-efficiency. Journal of Applied physics, 129 (24), (1-16). DOI: 10.1063/5.0048653
19. Svarc, J. (2022, July 28). Most efficient solar panels 2022. Clean Energy News.
20. Reve. (2021, April 13). Digitalization will drive solar power success. EVWind.
21. Feldman, D., Ramasamy, V., Fu, R., Ramdas, A., Desai, J. & Margolis, R. (2021, February 18). U.S. Solar Photovoltaic System and Energy Storage Cost Benchmark: Q1 2020. National Renewable Energy Laboratory (NREL).
22. Canadian Solar Inc. (2022, December 15). Canadian Solar to Start Mass Production of TopCon Modules with Power Output up to 690W. Seeking Alpha.
24. JinkoSolar Holding Co. (2022, December 12). JinkoSolar’s High-efficiency N-Type Monocrystalline Silicon Solar Cell Sets Our New Record with maximum Conversion Efficiency of 26.4%. Cision PRNewswire.
25. Bellini, E. (2022, November 21). Longi claims world’s highest efficiency for silicon solar cells. PV Magazine.
26. Trina Solar. (2022, October 10). New Trina Solar Vertex N modules redefine high-efficiency products.
27. Trina Solar. (2022, October 14). Trina Solar is Driving the Solar Industry Into the 600W+ Era.28. JA Solar. (2022, August 18). Explorer of Future PV – n-type DeepBlue 4.0 X.
Forecast Analysis Derived from the Following Sources
1. Absolar. (2022, October 5). Panorama of solar photovoltaic in Brazil and in the world.
2. China Energy Portal. (2022, January 27). 2021 electricity & other energy statistics (preliminary).
3. Empresa de Pesquisa Energética (EPE). (n.d.). Pde 2031 – English version. Accessed on November 15, 2022.
4. Energy Charts. (2022, October 31). Net installed electricity generation capacity in Germany in 2022. Fraunhofer.
5. Fitch Solutions. (n.d.). Infrastructure key projects data. Accessed on November 15, 2022.
6. Ministry of Economy, Trade and Industry (METI). (2022, February 25). Japan’s energy. Agency for Natural Resources and Energy.
7. Ministry of Power (GOI). (2022, March 29). Annual report 2021 – 22.
8. Ministry of Economy, Trade and Industry (METI). (2021, November 26). Outline of strategic energy plan. Agency for Natural Resources and Energy.
9. Musial, W., Spitsen, P., Duffy, P., Beiter, P., Marquis, M., Hammond, R., & Shields, M. (2022, September 12). Offshore wind market report: 2022 edition. Energy.gov.
10. Myllyvirta, L., & Zhang, X. (2022, May 3). China policy: Analysis: What do China’s gigantic wind and solar bases mean for its climate goals? Carbon Brief.
11. Om Section. (2022, October 19). Power sector at a glance all India. Ministry of Power (GOI).
12. Rosatom. (2022, September 15). NovaWind proceeds to installation of wind turbines at Kuzminskaya wind farm in Stavropol krai.
13. U.S. Energy Information Administration (EIA). (n.d.). International: Data. Accessed on November 15, 2022.
14. U.S. Energy Information Administration (EIA). (2022, October 25). Electricity: Preliminary monthly electric generator inventory (based on form EIA-860m as a supplement to form EIA-860).
15. Whitlock, R. (2022, July 8). Panorama: Germany approves largest renewable energy expansion plan in history. Renewable Energy Magazine.
Levelized Cost of Electricity: The levelized cost of electricity is calculated by dividing the lifetime costs of an electricity source by its expected electricity generation over its lifetime. This unit of measurement is commonly used in the power sector as a way to compare power sources that have different cost bases and units of measurement, such as coal-fired power and solar power.
Investing involves risk, including the possible loss of principal. The investable universe of companies in which RAYS and CTEC may invest may be limited. Narrowly focused investments will be more susceptible to factors affecting that sector and subject to more volatility. Solar and clean tech companies typically face intense competition, short product lifecycles and potentially rapid product obsolescence. These companies may be significantly affected by fluctuations in energy prices (both solar and conventional energy) and in the supply and demand of renewable energy, tax incentives, subsidies and other governmental regulations and policies. Solar companies may be adversely affected by commodity price volatility, changes in exchange rates, imposition of import controls, availability of certain inputs and materials required for production, depletion of resources, technological developments and labor relations. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from social, economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. RAYS and CTEC are non-diversified.
Shares of ETFs are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns.
Carefully consider the funds’ investment objectives, risks, and charges and expenses. This and other information can be found in the funds’ full or summary prospectuses, which may be obtained at globalxetfs.com. Please read the prospectus carefully before investing.
Global X Management Company LLC serves as an advisor to Global X Funds. The Funds are distributed by SEI Investments Distribution Co. (SIDCO), which is not affiliated with Global X Management Company LLC. Global X Funds are not sponsored, endorsed, issued, sold or promoted by Solactive AG or Indxx nor do Solactive AG or Indxx make any representations regarding the advisability of investing in the Global X Funds. Neither SIDCO nor Global X is affiliated with either Solactive AG or Indxx.
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