Is Solar Energy Declining?

The growth of solar energy has been one of the biggest energy stories over the past decade. Solar has expanded from a niche source of renewable power to a mainstream energy option around the world. However, there are now signs that the meteoric rise of solar may be slowing down. Some analysts argue that solar energy growth is plateauing in several key markets, and that the industry is facing challenges to continued expansion. This has sparked a debate around the future prospects for solar power. Is the solar boom coming to an end, or does solar still have room for substantial growth in the years ahead? This article will examine the trends around solar energy expansion, analyzing the factors driving and limiting growth, in order to shed light on the debate over solar’s future.

Table of Contents

Brief History of Solar Energy

The development of solar energy technology dates back over a century ago to the late 1800s when the photovoltaic effect was first observed. However, solar panels did not become commercially viable and enter mainstream use until the space race in the 1950s and 1960s. The U.S. space program drove advances in solar cell technology to power satellites.

It wasn’t until the 1970s energy crisis that solar energy adoption started to take off more broadly, especially in the U.S. The Public Utilities Regulatory Policies Act of 1978 helped boost solar by requiring utilities to interconnect with small power producers. Further government incentives like tax credits helped drive early adoption of solar panels on homes and businesses in the 1980s and 1990s.[1]

Current State of Solar Energy

Solar energy has seen impressive growth over the past decade. According to the Solar Energy Industries Association, as of 2020 there is a total of 97.2 gigawatts of solar energy capacity installed in the United States, enough to power over 18 million homes.

In 2020 alone, the U.S. installed 19.2 gigawatts of solar capacity, which is enough to power 6 million homes. This represents 43% growth from 2019 installation levels. The SEIA predicts that over the next 5 years, the U.S. will install an average of 25 gigawatts of solar capacity per year.

Currently, solar accounts for just over 3% of total U.S. electricity generation. However, it is projected that solar could provide 20% of total generation by 2030 as costs continue to fall and more homes and businesses adopt solar panels.

Growth of Solar Over the Past Decade

Solar energy has grown exponentially over the past decade. According to a report by the Solar Energy Industries Association (SEIA), the amount of solar installed in the United States has increased by more than 10,000% since 2010 (https://www.seia.org/solar-industry-research-data). The global solar market has grown at an average annual rate of 31% over the past 10 years (https://www.irena.org/solar).

This rapid growth far outpaces other energy sources. For example, between 2010-2020 solar grew at a compound annual growth rate of 42%, compared to just 3% for natural gas and 1% for coal and nuclear energy globally (https://www.irena.org/solar). The charts below illustrate the tremendous expansion of solar over the past decade:

[insert solar growth chart]

Solar accounted for just 0.1% of total U.S. electricity generation in 2010, but had risen to 3.3% by 2020. Worldwide, solar’s share of electricity generation grew from 0.5% in 2010 to 3% in 2020 (https://www.eia.gov/energyexplained/solar/use-of-solar-power.php). This exponential growth demonstrates solar’s increasing competitiveness and potential to power a growing share of the world’s energy needs.

Factors Driving Recent Growth

The rapid expansion of solar energy adoption in recent years can be attributed to several key factors. Government subsidies and tax incentives have helped reduce the upfront costs of solar panel installation for homeowners and businesses (“Small Solar Energy – Growth Factors”). Countries like the U.S. offer federal tax credits, while local and state governments provide additional rebates and incentives. This has made the return on investment for solar more appealing.

In addition, the cost of photovoltaic panels has declined dramatically, with prices dropping over 70% in the last decade (“Small Solar Energy – Growth Factors”). Technological improvements have increased the efficiency of solar panels, allowing more electricity to be generated from the same amount of sunlight. As production scales up, manufacturing costs continue to fall as well.

Finally, consumer preference for renewable energy has been a key driver. Public concern about climate change and desire for energy independence has significantly increased demand for solar power (“Changes in world energy are inevitable”). With solar electricity pricing comparable to or cheaper than utility rates in many areas, more homeowners and businesses are choosing to go solar.

Is Growth Slowing Down?

Recent data shows that after over a decade of rapid expansion, growth in new solar installations is slowing down in the United States. According to the Solar Energy Industries Association (SEIA), solar deployment decreased 12% in 2022 compared to 2021, with 23.9 GW of new capacity added versus 27.3 GW the previous year (SEIA).

This decline is attributed to several factors. Supply chain disruptions, rising costs, and policy uncertainties have made it more challenging to develop new projects (Deloitte). The phase-out of federal tax credits is also dampening growth. At the same time, rooftop solar installation growth has slowed as the market reaches maturation.

However, industry analysts emphasize this is a temporary setback. Solar power expansion is projected to pick up again in coming years. The SEIA predicts annual installations will reach 49 GW by 2025. Similarly, the International Energy Agency (IEA) forecasts global solar PV additions will more than double by 2028 compared to 2022 as costs continue to fall (IEA).

Therefore, while data shows slower near-term growth, the long-term solar energy outlook remains positive. Annual installations are still expected to increase substantially over the next decade.

Challenges Facing Solar Expansion

While solar energy has seen impressive growth, there remain challenges to further expansion. Two key challenges are the higher upfront costs compared to fossil fuels and the intermittency of solar that requires storage solutions.

The installation costs of solar panels and related infrastructure are still higher than building equivalent fossil fuel power plants according to a study by the National Renewable Energy Laboratory (NREL) [1]. These higher upfront capital costs can deter adoption, even though lifetime costs of solar can be lower. Fortunately, solar costs have fallen rapidly, with panel costs dropping 90% in the last 10 years [1]. Further cost reductions through technology improvements, economies of scale, and supportive policies can help address this challenge.

Another key challenge is the intermittent nature of solar power generation, which depends on sunny weather. Solar intermittency creates a need for energy storage solutions to provide power when the sun isn’t shining. Battery storage technologies are improving but remain expensive. Other solutions like pumped hydro and thermal storage are geographically limited. Continued innovation and cost declines in storage will help make solar power more dispatchable and reliable [2].

Future Solar Energy Potential

Solar energy has the potential to supply a much larger share of the world’s energy needs in the future. According to research from MIT’s Future of Solar Energy study, solar could feasibly supply up to 50% of total electricity demand by 2050 with continued cost reductions and technology advances (https://energy.mit.edu/research/future-solar-energy/). Key factors enabling this growth include improved solar cell efficiencies, reduced costs through economies of scale and manufacturing innovations, advances in energy storage and grid integration, and increasing electrification of energy end uses like transportation and heating.

Emerging solar technologies like building-integrated PV (BIPV) and solar paints and films also offer potential. BIPV integrates solar cells into building materials like roof tiles, windows, and facades. This allows structures to generate their own electricity while serving as weatherproofing. Solar paints and films can turn nearly any surface into a solar energy harvester. If costs become competitive, these technologies could greatly expand the surfaces that can be utilized for solar power generation.

With continuing declines in solar PV costs and new innovations on the horizon, solar appears poised to become a major pillar in the global energy system of the future. But fully realizing its potential will require supportive policies, grid infrastructure, and storage technologies to balance solar’s intermittent output.

Conclusion

As we have explored, solar energy has experienced rapid growth over the past decade, driven by falling costs and supportive government policies. The industry set new records for solar installations in 2016, and capacity expansions are projected to continue at a fast pace in the coming years.

However, there are concerns that growth may begin to plateau in the next few years. Softening demand in major markets like China and uncertainties about policy support have led some analysts to predict a potential slowdown or plateau in the solar growth trajectory.

Nevertheless, solar remains a small fraction of global electricity generation, demonstrating tremendous room for future expansion. With costs continuing to fall and energy storage solutions improving, solar energy has the potential to eventually become one of the world’s leading sources of electricity. While the breakneck pace of growth may moderate, the broader trajectory remains pointed toward solar playing a major role in the global energy transition.

Key References

This analysis drew upon the following key sources as evidence and data to support the conclusions presented:

The 2021 Renewable Energy Data Book published by the National Renewable Energy Laboratory (NREL), which provided comprehensive statistics on renewable energy growth and capacity in the United States.

The Solar Energy Industries Association’s (SEIA) 2021 Year in Review report, which outlined current solar installation trends and profiles of leading solar states.
SEIA and Wood Mackenzie’s U.S. Solar Market Insight report series, which offered detailed quarterly assessments of U.S. solar market conditions.
The International Renewable Energy Agency’s (IRENA) Renewable Capacity Statistics 2022, which provided global renewable energy capacity data.