- Global solar capacity growth is being boosted by the development of solar mandates which have already come into effect in California, USA.
- Mainland China’s expected rooftop solar mandates, set for 2023, for commercial buildings will create vast new opportunities for growth and have boosted our outlook for capacity growth.
- European Union (EU) level rooftop solar mandates will prove more difficult to implement with key markets, while Germany has already begun bringing forwards requirements in parts of the country, including Berlin.
Global solar capacity growth is being boosted by the development of solar mandates which have already come into effect in California, USA. We expect that solar capacity growth globally will be boosted by the development of rooftop systems, with this more decentralised form of solar deployments set to better serve consumers’ needs for electricity while in many cases feeding back into the grid. We expect this trend to increasingly be tied to the development of small-scale residential battery systems. Furthermore, rapidly urbanising markets will see a greater impact as mandates prove easier to implement in new buildings with rooftop designs developed in the expectation of hosting solar cells.
In January 2020, California implemented the US’s first state-wide solar rooftop mandate which requires most newly constructed homes and low-rise apartment buildings to install rooftop solar systems. The mandate was added to the state’s building code as a part of new sustainability-related standards. The new policy provided a boost to California’s nation-leading small-scale residential and commercial solar sectors, with an average of 80,000 new homes built in the state each year that will now require rooftop solar installations, according to the California Department of Housing and Community Development. For comparison, The California Solar & Storage Association estimates that an average of 15,000 rooftop solar installations occurred on new homes per year within the state prior to the mandate going into effect.
The long-term positive outlook for residential solar supports our overall positive growth forecast for the US solar sector, given the potential for similar mandates across other states. In 2021, lawmakers in Massachusetts introduced a bill titled The Solar Neighborhoods Act, which would mandate solar panels be installed on all new homes, apartment complexes, and office buildings. That said, the bill has yet to advance. Furthermore, US rooftop solar will benefit from both the reforms to solar equipment supply and manufacturing the Biden Administration has brought through as well as the passing of the Inflation Reduction Act.
Mainland China’s expected rooftop solar mandates, set for 2023, for commercial buildings will create vast new opportunities for growth and have boosted our outlook for capacity growth. Large-scale solar deployment in Mainland China will be boosted significantly by the rolling out of new rooftop solar mandates. We highlight that the centralised nature of Mainland China’s government, the rapid pace of urbanisation and access to abundant low-cost solar technology will enable a far larger and faster uptake of rooftop systems. In our view, these combined factors will make Mainland China the largest decentralised rooftop solar market globally.
The government’s plans will seek to see that all new build commercial structures will be covered with rooftop solar by 2025. This follows prior policy on the rollout of rooftop solar mandates coupled with solar-plus-storage programmes. It has been estimated by the National Energy Administration (NEA) that these programmes could add 130-170GW of capacity by the end of 2023. By the end of 2023, the bureau proposed to cover with solar panels 50% of rooftop space on party and government buildings, 40% of schools, hospitals and other public buildings, 30% of industrial and commercial spaces and 20% of rural households. The government has been proactive in encouraging decentralised solar deployments and seeking to bolster power sector security around self-consumption. The government is coupling this drive with an increase in battery systems.