How Advanced Is Solar Energy?

Solar energy technology has come a long way over the past century. The first solar panel was invented in 1883, but it took until the 1950s for silicon photovoltaic (PV) solar panels like we know today to be developed (The History of Solar Energy). In the 1970s and 80s, solar PV started to gain traction for practical applications, though it remained expensive. Now, solar energy is one of the fastest growing and increasingly cost-competitive renewable energy sources.

Solar energy works by converting sunlight into electricity through the photovoltaic effect. Solar panels are made up of photovoltaic cells, usually from crystalline silicon, that produce direct current (DC) power proportional to how much light hits them (EERE Audience Analysis Report). This DC power must be converted to alternating current (AC) for integration with the grid. Solar energy can be used at both centralized utility scales and decentralized residential scales.

Today, solar technology has advanced to the point of grid parity in an increasing number of regions. With improved solar panel efficiency, dramatically decreased costs, and energy storage solutions to enable 24/7 solar power, solar electricity is now highly competitive. However, work still remains to fully transition and integrate solar power into energy grids worldwide.

Table of Contents

Solar Panel Efficiency

Solar panel efficiency refers to the percentage of solar energy from sunlight that is converted into electricity by a solar panel. Theoretically, the maximum efficiency of traditional solar panels is around 30% due to limitations of the materials used. However, in lab conditions researchers have been able to achieve significantly higher efficiencies by using multi-layer solar cells and concentrating sunlight onto smaller high efficiency solar cells.

In 2021, scientists at the National Renewable Energy Laboratory set a world record by creating a solar cell with 47.1% efficiency under concentrated illumination [1]. This record was set in lab conditions, under extremely concentrated light. Another team in 2022 achieved a remarkable 39.5% efficiency under one-sun global illumination [2]. These lab records showcase the potential for higher efficiency solar panels.

However, the average solar panel on the market today has an efficiency around 15% to 20%. Over the last 10 years, typical commercial panel efficiencies have slowly increased from about 15% to up to 22% for premium panels. Continued improvements in commercial solar cell efficiency will be key to further driving down costs.

Cost Declines

The cost of solar panels and installation has dropped dramatically over the past few decades. According to Energysage, the average price per watt for solar panels in the 1970s was around $76. Today, the average cost is around $2.70 per watt, representing a 96% cost decline.

Installation costs have also decreased significantly. In 2010, the average residential solar system cost over $7 per watt to install. Now, costs range from $2.50 to $3.50 per watt depending on system size and location, representing a 50-60% drop in installation costs over the past decade (Source).

Overall, the total installed cost of an average-sized 6 kW solar system in 2010 was over $40,000. Today, that same system costs between $14,000 and $21,000, representing a 60%+ decline in total system costs.

Factors driving the cost declines include technological improvements, economies of scale, and improved business and installation practices. As adoption continues to increase globally, costs are expected to keep falling, making solar power increasingly affordable and competitive.

Grid Parity

Grid parity refers to the point at which the cost of generating electricity from solar panels equals the cost of purchasing power from the electricity grid. At grid parity, solar becomes cost-competitive with traditional energy sources like coal and natural gas on a per-kilowatt-hour basis without subsidies. Reaching grid parity is considered an important milestone in solar energy adoption.

According to a 2012 study from the National Renewable Energy Laboratory ([1]), many areas in the U.S. reached grid parity for residential solar photovoltaic (PV) systems between 2010-2012 as panel costs declined and electricity rates rose. States like California, Hawaii, and several northeast states have already achieved grid parity due to high electricity prices. Globally, countries like Germany, Spain, Italy, and Australia have also reached grid parity in areas with strong solar resources.

As solar costs continue to decrease, more locations are expected to hit grid parity. The Institute for Energy Research projects over 75% of U.S. states will reach parity by 2020 ([2]). Lower solar prices coupled with rising retail electricity rates are key drivers enabling grid parity for solar PV.

Solar Storage

Solar energy is an intermittent source, so being able to store the solar-generated electricity is important for supplying continuous power, especially when the sun isn’t shining. Battery storage provides a solution for solar users to store excess solar power during the daytime for use at night. Having solar paired with storage also helps avoid peak pricing times and manage electricity use during power outages. Cost has been a barrier to solar+storage adoption, but costs have declined as battery technology improves.

Lithium-ion batteries have become the predominant storage technology paired with solar systems. Prices for lithium-ion batteries have dropped 89% in the last decade according to BloombergNEF [1]. Tesla’s Powerwall is one of the most well-known home battery options. Prices range from $7,500-$16,500 for 13-27 kWh versions. Competitors like Sonnen and LG Chem have products in a similar range.

Recent advances are making solar+storage more viable and sustainable. For example, Photoncycle has developed a technology using hydrogen storage which could allow solar households to become fully self-sufficient [2]. Continued declines in battery costs along with tech improvements will further propel solar to be paired with storage.

Large-Scale Solar

The growth of utility-scale solar has rapidly accelerated in recent years. As of 2022, there are over 37,000 megawatts (MW) of utility-scale solar projects operating in the U.S., with another 112,000 MW under development, according to the Solar Energy Industries Association (SEIA) [1]. The U.S. solar market installed 23.9 gigawatts (GW) of PV capacity in 2021, and over 62% came from utility-scale installations [2].

Some major utility-scale solar projects completed in recent years include:

The 579 MW Solar Star project in California, which was the world’s largest solar farm when completed in 2015.
The 550 MW Topaz Solar Farm in California, which produces enough electricity to power 160,000 homes annually.

The 500 MW Desert Sunlight project in California, which utilizes thin-film solar panels spread across 4,200 acres.

Residential Adoption

Rooftop solar is seeing strong growth in residential adoption rates globally. According to the U.S. Energy Information Administration, the number of homes with rooftop solar is expected to reach 30 million globally by 2030, a massive increase from just 7 million homes in 2019 [1].

In the United States, rooftop solar adoption rates vary significantly by state. California leads the country with over 1.3 million homes powered by solar panels as of 2021. Other leading states include Arizona, New Jersey, Nevada and Florida [2]. Adoption rates are highest in states with strong solar incentives, ample sunshine and high electricity costs.

Globally, Australia and Germany have emerged as major markets for rooftop solar. Australia now has the highest penetration rate in the world, with over 30% of households powered by solar panels. High electricity prices coupled with abundant sunshine have made rooftop solar an attractive option [3]. Germany has over 2 million solar-powered homes thanks to generous feed-in tariffs.

Solar Forecasts

Solar energy is projected to grow substantially in the coming decades. According to the Solar Energy Industries Association (SEIA), the U.S. solar market is expected to quadruple in size over the next 10 years, going from 3% of electricity generation today to 20% by 2030 (SEIA). Global solar installations are also forecast to accelerate, increasing from about 835 GW of cumulative capacity in 2021 to over 4,600 GW by 2030 (IEA).

By 2040, solar could provide up to 20% of U.S. electricity generation, according to projections by Deloitte (Deloitte). Other estimates are even more bullish, with SEIA forecasting that solar will account for over 30% of U.S. electricity by 2030. Key factors driving growth include the continuing cost declines of solar panels, improved energy storage capabilities, supportive policies, and increased adoption by utilities, businesses and homeowners.

Globally, the share of electricity from solar PV is expected to reach 12% by 2030, making it the largest source of power generation after coal and gas. With supportive policies and sustained cost reductions, solar has the potential to transform electricity systems around the world and play a major role in the clean energy transition.

Challenges Remaining

While solar energy has made significant advances, some key challenges remain before it can fully displace fossil fuels. One major issue is the “duck curve” caused by overgeneration during peak sunlight hours. This can lead to curtailment when solar output exceeds demand, as well as ramping problems when solar production decreases in the evening but demand remains high. Market and grid reforms are needed to better manage this variability through measures like energy storage, time-of-use pricing, and infrastructure upgrades.

Other obstacles impeding fuller adoption of solar include the need for improvements in grid flexibility, permitting and siting processes, business models, and financing options. Upfront costs remain high compared to fossil fuels, despite recent declines. Policy and regulatory uncertainty also dampens investor confidence and project pipelines in some markets. Work is needed to modernize electricity markets so they fully value solar’s benefits and enable fair competition.

While solar has achieved grid parity in many regions and costs continue to fall, achieving very high penetrations would likely require further innovations in areas like energy storage, smart inverters, forecasting tools, and transmission. Reliance on rare earth metals and international supply chains also pose challenges. Still, analysts predict with supportive policies and sustained R&D, solar can realistically meet 20-30% or more of global electricity demand by 2030.

References:

[1] https://energy5.com/overcoming-hurdles-why-solar-energy-faces-challenges-in-meeting-the-world-energy-needs

[2] https://www.trvst.world/renewable-energy/challenges-for-renewable-energy/

Conclusion

In conclusion, solar energy has advanced significantly in recent years but still has room for improvement. The efficiency of solar panels has steadily increased, with top lab prototypes now exceeding 47%. Costs have fallen dramatically, leading solar to reach grid parity in many regions. Utility-scale solar adoption has grown exponentially, while residential solar is also rising rapidly. Forecasts predict solar will continue to expand its market share in the coming decades.

However, challenges remain. Further improvements in efficiency and storage technology are needed for solar to compete with fossil fuels across all applications. The intermittent nature of solar still poses grid management issues. And total installed capacity remains small relative to overall energy demand. But the trends are encouraging, and solar appears poised for continued advancement and disruption of the energy sector.