2023 Global Solar Outlook: Falling Costs, Localization & Distributed Energy Lead Transitio

According to S&P Global, the top three renewable energy trends for 2023 are declining component costs, localized manufacturing growth, and the rise of distributed energy.

After two years of supply chain disruptions, raw material and transportation costs are decreasing, with global shipping rates returning to pre‑pandemic levels. However, S&P Global notes that this cost relief will not immediately lower overall capital expenditures for renewable projects. Land acquisition and grid interconnection remain the industry’s most significant bottlenecks. A skilled labor shortage and rising capital costs may prevent substantial near‑term reductions in project capex.

PV module prices are falling faster than expected due to increased polysilicon supply. While this could lower module prices, manufacturers seeking margin recovery may offset the gains. Utility‑scale project developers will benefit more significantly from lower costs, intensifying global demand – especially in cost‑sensitive emerging markets.

Distributed solar cemented its role as the dominant power supply in many mature markets during 2022. S&P Global expects expansion into new consumer segments in 2023, with PV systems increasingly integrating with energy storage, shared solar options, and diverse financing models (leases, PPAs) spreading globally.

The policy environment broadly favors increased distributed generation through cash grants, VAT reductions, rebates, or protective tariffs. Supply chain issues and national security concerns are accelerating localization of solar and storage manufacturing, particularly in the US and Europe. Policies like the US Inflation Reduction Act (IRA) and Europe’s REPowerEU are attracting major investment into new manufacturing capacity. S&P Global projects global wind, solar, and battery storage installations will reach nearly 500 GW in 2023 – a 20%+ increase over 2022.

Persistent concern: “Yet concerns persist about China’s dominance in equipment manufacturing – particularly in solar and batteries – and the various risks involved in relying too heavily on a single region to supply the required commodities,” S&P Global said.