Solar Energy

Even Solar Energy’s Biggest Fans Are Underestimating It

“When you look at the absolute numbers…it is completely sort of mind-blowing,”

Umair Irfan

Every day, the sun’s rays send 173,000 terawatts of energy to Earth, 10,000 times the amount used by all of humanity. Which is to say, the potential for solar energy is immense, and we’re nowhere near the limit.

That’s why solar energy is such an appealing prospect, particularly as an alternative to the fossil fuels that cause climate change. And over the past decade, solar energy technology has vastly improved in performance and plummeted in cost.

As a result, photovoltaic panels have cropped up like dandelions across fields and rooftops at a stunning pace. Yet even the people most plugged-in to the energy industry and most optimistic about solar power continue to underestimate it. In fact, it’s a long-running joke among energy nerds that forecasters keep predicting solar will level off as it continues to rocket up to the sun.

“In fact, it’s a long-running joke among energy nerds that forecasters keep predicting solar will level off as it continues to rocket up to the sun.”

“Solar does continue to surprise us,” said Gregory Nemet, who wrote How Solar Energy Became Cheap, in an email. “It seems like it shouldn’t at this point. It’s been roughly 30 percent growth each year for 30 years. And costs continue to fall so new users—and new uses—continue to emerge.”

In the past year, solar power has experienced Brobdingnagian growth, even by solar standards. According to a new report from Ember, an energy think tank, the world is on track to install 29 percent more solar energy capacity this year—a total of 593 gigawatts—compared to last year, which was already a record year. This is more than one-quarter of the electricity produced by every operating coal plant in the world combined. In 2020, the whole world had installed just 760 GW of solar in total. Yes, this deserves all the italics I’m using.

That solar power installations are going up as the technology improves and prices come down isn’t too surprising, but the sustained surge is still stunning.

“When you look at the absolute numbers that we’re on track for this year and that we installed last year, it is completely sort of mind-blowing,” said Euan Graham, lead author of the report and an electricity data analyst at Ember.

Several factors have aligned to push solar power installations so high in recent years, like better hardware, economies of scale, and new, ripe, energy-hungry markets. Right now, solar still just provides around 5.5 percent of the world’s electricity, so there’s enormous room to expand. But solar energy still poses some technical challenges to the power grid, and the world’s ravenous appetite for electrons means that countries are looking for energy wherever they can get it.

So if you’re concerned about climate change, it’s not enough that solar wins; greenhouse gasses must lose.

Why’s everything so sunny for solar?

Solar energy has a lot going for it, particularly photovoltaic panels. They’re modular and they scale up and down easily—there isn’t much difference between a panel that’s one of a dozen on a suburban rooftop and a panel that’s one of thousands in a megawatt-scale power plant spanning acres. They’re mass-produced in factories using well-established processes, namely semiconductor fabrication. That means tiny improvements in cost and performance in individual panels add up to massive advantages in aggregate.

And for solar, gains have been anything but tiny: Solar electricity prices have dropped 89 percent since 2010 while silicon solar panels have surged in efficiency from 15 percent to more than 26 percent over the last 40 years.

Solar’s scalability means that curious developers can try it out with less upfront investment before ramping up. Most solar installations use off-the-shelf components, so when a homeowner or a utility does decide to step into the sunlight, they can start making power quickly. “That development time is absolutely minimal compared to something like building a nuclear power station, but also even just a wind farm, which can take five to seven years or so from the initial permitting to first power coming out,” Graham said.

Even if you don’t care about climate change, solar energy has become one of the cheapest, fastest ways to sate your appetite for electrons. Texas, the biggest oil and gas producer in the country, is also the national leader in adding solar power to its grid, surpassing California.

But what happens when the sun sets?

Solar does have some drawbacks. The sun does sink below the horizon every day, and solar energy’s output varies with weather and the seasons—dipping when it’s cloudy and when the days get shorter. Banking electricity when it’s abundant to use when it’s scarce would resolve this problem, and, well, there’s good news on that front too.

Energy storage technologies like batteries are also getting way better and cheaper. The price of batteries has tanked 97 percent since 1991. Because of better technology, falling costs, and more markets for saving power, the US is on track to double its grid energy storage capacity compared to last year. More than 10 gigawatts of solar and storage came online in 2023 across the country and that’s likely to double this year. “Energy storage is at an earlier stage [than solar] but we are likely to see rapid expansion in that segment, especially in regions where solar and wind penetration are high already such as California and Texas,” said Steve Piper, director of energy research at S&P Global Commodity Insights, in an email.

​Combined solar-plus-storage energy projects are already cheaper than new fossil fuel power plants in many parts of the world, and costs are poised to fall further.

Even knowing all this, energy experts keep underestimating the potential of solar. “Forecasters recognize that with regard to solar PV we are in a phase of rapid expansion and adoption,” Piper said. “In a period like this, being off about the rate of expansion by even a little bit will still result in a large forecast error.”

The details of solar’s expansion are even more surprising

Not every country is riding the solar power rocket to the sun just yet. Individual countries have seen peaks and dips in solar installations based on how well their economies are doing and how strong their policy incentives are, like feed-in tariffs, net metering, and tax credits.

In the past couple of years, the global story has really been about China. Add up every solar panel installed in the US in history and you get how much China installed last year alone, almost 60 percent of all new solar installed in the world. The sheer scale of this deployment broke a lot of forecasters’ models.

“No research shop necessarily predicted the pace at which China was going to grow their solar capacity over the last year or so,” said Michelle Davis, head of global solar at Wood Mackenzie, an energy market analysis firm. “Everyone’s been revising them upward in order to correct for the data that’s been coming out of China.”

Photovoltaics are also a key part of China’s export strategy, and last year, China cut wholesale panel prices in half. That in turn has led to a huge surge in exports and knock-on solar power booms in other countries. Pakistan, the fifth-most populous country in the world, imported 13 gigawatts of Chinese solar modules in the first half of this year alone. That’s almost one-third of Pakistan’s total installed electricity to date.

Davis cautioned that imports of solar panels don’t necessarily mean they’ll all be installed, but it’s definitely a sign that solar is growing and its impact may be greater there than in larger or wealthier countries. While the solar energy additions in developing countries may be smaller in absolute numbers, they’re proportionately a larger share of the grid.

“Those developing parts of the world are growing at a more rapid rate on a smaller base,” Davis said. “The big Kahunas in the solar world are China, Europe, and the United States. Those markets are maturing, though, and they’re not growing as fast.”

There are some clouds in the sky

This can’t keep going on forever, right? Well, again, solar is still in the single digits in the global electricity supply, and it’s often the cheapest, fastest, and easiest way to generate power. That momentum isn’t going to dissipate anytime soon. In the US, the Federal Reserve’s recent interest rate cut means it will likely be even cheaper to get a loan to finance solar power, giving it another boost.

Some challenges have also emerged. If you want to add more solar to the US power grid right now, you need to take a number and get in line. There are hardware limits to how much intermittent power you can add to the aging electricity network, and making the necessary upgrades to accommodate it costs money and takes time. Delays are getting longer: In 2015, a typical energy project waited about three years in an interconnection queue. In 2023, that wait time was almost five years. Getting the permits to build more large-scale solar is also a tedious process. Many countries are facing similar hurdles.

In addition, the US is bolstering its domestic clean energy sector with trade barriers, including tariffs on Chinese solar panels. That may give an advantage to US producers but it raises overall costs and imposes supply chain constraints. The US is also investing $40 million to bring more of the solar energy supply chain within its borders.

And solar power didn’t just fall out of a coconut tree; it exists in the context of a global economy that’s still 80 percent powered by coal, oil, and natural gas. Overall global energy consumption is growing, and not everyone is discerning about where they get their heat and electricity. As a result, fossil fuel demand is also rising, though it may peak before the end of the decade. To meet international climate change targets of limiting warming to less than 3.6 degrees Fahrenheit this century, greenhouse gas emissions have to fall at a much faster clip and effectively zero out by 2050.

Analysts are anticipating that solar energy will help bend that curve. According to Wood Mackenzie, total global solar capacity is going to almost quadruple in the next decade. It’s not certain whether the world will reach its climate goals, but solar will continue to spread as sure as the sun will rise.