The remarkable rise of solar power

The rapid growth of solar power in recent years has been one of the most remarkable stories of global energy. In 2022, the world added more new solar capacity than all other energy sources for electricity combined. Global energy generation from solar photovoltaic (PV) panels, which convert sunlight into electricity, rose by 270 terawatt hours (TWh), marking a 26% rise on the previous year. While solar power shows significant promise, there remain significant challenges in scaling it to meet net-zero targets.

The growth of solar

One significant factor that has driven the expansion in solar capacity is its growing efficiency. Efficiency of PV panels was just 6% when PVs first reached the market in the mid 1950s. Today’s PVs are up to 24.5% efficient, with recent advances in technology indicating that figure could rise above 30% later this decade.

Another significant factor is the falling cost of solar, which has now become cheaper to produce than any other energy. MIT reported in 2018 that PV module costs had dropped by 99% over the previous four decades. Economies of scale have supported this drop as the industry has grown at speed. More recent estimates have adjusted this figure. Owing to high inflation and supply-chain issues, solar’s levelized costs of energy (the price at which generated electricity should be sold to break even across a system’s lifespan) increased in 2023. Yet solar remains the single cheapest source of energy in the world, according to the IEA.

Government policy has also played a crucial role. According to research by MIT, subsidies and market incentives — and more recently the drive by many countries to reduce dependency on Russian oil and gas — account for about 60% of the decline in overall costs. Government feed-in tariffs – which guarantee a fixed price for renewable electricity sold to the grid – have further stimulated investment in the sector.

Is solar the solution?

Solar remains the third largest renewable electricity technology behind hydropower and wind — but it accounted for just 4.5% of total global electricity generation in 2022. To meet net-zero targets, solar capacity must therefore increase by 20% every year until 2030. Although it’s currently on track to meet that target, the industry still faces challenges.

The intermittent nature of solar power could pose a particularly significant challenge as it takes on a larger share of energy generation.  Unlike traditional energy sources that can generate power continuously, solar is naturally dependent on availability of sunlight.

Its intermittent nature requires a reliable backup power source to maintain a consistent energy supply, such as natural gas or battery storage. Innovations including smart grids — which can re-route power by monitoring supply and demand — could help support intermittent renewables including solar, but further investment in infrastructure and research and development will be required to roll these technologies out at scale.

Additionally, the up-front cost of installing PV panels, inverters and batteries is a significant investment for businesses and homes. In the US, a 6KW residential set up has dropped from $50,000 to $20,000 over the past decade — but that is still unaffordable for many businesses and households and will typically take years to pay for itself.

On a larger scale, the cost of solar plant infrastructure, storage and transmission is considerable, and its lifespan uncertain. Estimates suggest nearly 0.8% of US land would be needed for enough solar power plants to supply its population – one reason why solar panels on water are attracting investment.

Moreover, PV panels also contain hazardous materials that will require careful end-of-life management. The International Renewable Energy Agency warns defunct solar panels could create up to 78 million tons of waste by 2050 if not recycled.

Solar power is already displaying its significant potential to play a critical role in the energy transition. Overcoming challenges in scalability and continuing to reduce costs of both the technology and its associated infrastructure will be critical to ensuring it fulfils that potential.