While solar energy still accounts for only a small fraction of the world’s total electricity generation, it is playing an increasingly important role in the renewable energy mix.
Solar Energy Overview
Considered at a high level, solar power generation falls into two categories. With distributed solar, solar panels convert sunlight into electricity on a small scale to power individual buildings. Also known as “behind the meter” setups, these solar panels are often found on rooftops, but distributed solar is also associated with on-site energy storage, microgrids, and shared community solar arrangements.
With utility-scale solar, off-site power plants “in front of the meter” supply energy to thousands of homes and businesses. Boasting ranks of solar panels spread over 15 square miles and a capacity to produce 2.245 giga watts (GW) of electricity, the Bhadla Solar Park in the desert region of northwestern India is the world’s largest solar plant.
Beyond those distinctions, photovoltaic solar differs from thermal. While the former converts sunlight directly into electricity, the latter uses sunlight to heat fluid in tanks to store and deploy as electricity later.
For obvious reasons, solar panels are especially well-suited to areas with abundant sunshine. China is the world’s foremost producer of solar panels and solar-generated electricity; with 2.2 GW of capacity, its Qinghai solar farm is second in scale only to Bhadla. Other large solar plants are located in the United Arab Emirates, Mexico, and southern California in the United States. In Africa, where electricity demand is growing and geographical conditions are favorable, improved financing could help grow solar capacity.
Solar projects are also viable in less sunny areas, yet as with wind energy, the amount of electricity produced from photovoltaic solar power varies with changing weather conditions. This unpredictability can make it challenging to align energy supply and demand. However, developments in lithium-ion batteries have raised hopes that the cost of storing excess electricity will come down and further improve the outlook for solar and renewables as a whole.
As solar technology has improved, so have the economics.
The Growth of Solar
By one measure, global solar power generation has grown more than 20-fold since 2010. The International Energy Agency expects to see total worldwide renewable capacity expand by 50% from 2019 to 2024, with solar accounting for 60% of that growth. In the US, the Center for Climate and Energy Solutions calls solar the fastest-growing renewable energy source, expecting it to climb from 11% of renewable power generation in 2017 to 48% by 2050.
As solar technology has improved, so have the economics. According to the International Renewable Energy Agency’s Renewable Power Generation Costs in 2019, the cost of solar photovoltaics fell by 82% between 2010 and 2019, with utility-scale solar electricity costs falling 13% from 2018 to 2019. By contrast, the report found that onshore wind costs declined 40% between 2010 and 2019, and offshore wind costs dropped 29%.
COVID-19’s lockdowns and economic disruptions have also accelerated falling solar costs over the next five years, as Bloomberg reports. “With the demand destruction caused by COVID-19, the risk of oversupply is increased and module suppliers have reduced prices as a result,” said Laura Hindley of energy consultancy Wood Mackenzie. The Solar Energy Industry Association adds that lay-offs have hit residential and commercial distributed solar enterprises especially hard, as they tend to rely on in-person sales. That said, President Joe Biden’s plans to create millions of clean energy jobs could help bolster the industry as costs, technology, and need continue to increase solar energy’s relevance.