The solar energy industry: The leader in renewable energy generation

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  Quantumrun Foresight
• July 22, 2022

Insight summary

Solar electricity's growing affordability is reshaping the global energy landscape, encouraging a shift towards renewable sources and impacting various aspects of society. Advances in technology and declining costs are making solar power more accessible, influencing governmental policies, industry practices, and consumer behavior towards sustainable energy. This transition is fostering new job opportunities, driving economic growth, and promoting environmental health, positioning solar energy as a key player in future energy solutions.

Solar energy industry context

Solar electricity's affordability significantly improved in 2022, surpassing the International Energy Agency's projections from 2019. This price reduction has fueled greater enthusiasm for solar technology's role in the energy industry and its potential to help lower global carbon dioxide emissions. The cost-effectiveness of solar power is becoming a vital factor in worldwide efforts to transition to cleaner energy sources. This trend is particularly relevant as nations and organizations intensify their focus on reducing environmental impacts and complying with climate change mitigation strategies.

Wood Mackenzie, a research company, indicates that solar power costs are projected to continue their downward trend until at least 2030. Driving these cost reductions are several key technological advancements. These include more efficient solar trackers, bifacial modules that maximize energy capture, larger inverters, and increased automation in solar energy systems. These innovations are making solar energy more accessible and affordable, which is critical for its adoption on a global scale.

The growing dominance of solar energy in the renewable energy sector is leading to interesting developments in energy management. Industry experts suggest that in some cases, it may become more economical to waste surplus solar energy rather than invest in large-scale storage solutions. This shift indicates that the operational and installation costs of solar energy systems are decreasing significantly. Consequently, businesses around the world may find it increasingly feasible to adopt solar energy, benefiting from reduced operational costs and contributing to broader decarbonization efforts, especially in projects supported by low-cost government financing.

Disruptive impact

The continuous decrease in solar energy prices, coupled with the escalating need to transition from fossil fuels, is likely to propel the widespread adoption of solar energy globally. This trend could stimulate further investments in various renewable energy sources and the necessary infrastructure to support them. By the late 2030s, a major shift is anticipated where traditional energy companies, currently reliant on fossil fuels, will likely allocate a substantial portion of their resources towards renewable energy. This strategic shift is not just an environmental decision but also a financial one, as diversifying into renewable sources may offer more stable and sustainable income streams in the face of dwindling fossil fuel reserves and increasing regulation.

As solar and other renewable energy sources become more prevalent, there may be a corresponding surge in investments to upgrade and modernize energy grids. These modern grids are expected to be more decentralized and agile, capable of integrating various energy sources while maintaining a balance in the electrical system. Such advancements may include the development and implementation of advanced storage technologies. These technologies are critical for managing the intermittency of renewable energy sources like solar and wind, ensuring a steady and reliable energy supply.

The evolution of energy grids towards more decentralized systems signifies a shift in how energy is distributed and managed. This trend could lead to a more participatory energy market, where consumers can also become energy producers, contributing surplus energy back to the grid. Additionally, the integration of advanced storage solutions and smart grid technologies may enhance the efficiency and reliability of power distribution, reducing energy waste and lowering costs for end-users. 

Implications of continued solar energy sector growth

Wider implications of the solar industry becoming increasingly central to future energy sector investments may include:

• Renewable power companies and investors adjusting their strategies to include the expanding role of solar power, leading to diversified and potentially more stable investment portfolios.
• Nations with high solar radiation, particularly those with fewer natural resources, investing in large-scale solar infrastructure, transforming into energy exporters and reshaping global energy dynamics.
• Residential and commercial buildings increasingly incorporating solar panels as a standard feature, leading to reduced energy costs and a rise in self-sustaining, off-grid structures.
• Battery technology firms intensifying research to reduce battery costs, aiming to optimize storage for solar energy, thereby ensuring consistent power supply beyond daylight hours.
• G7 countries and significant regional groups prioritizing solar energy in infrastructure planning, driving investments in local production of solar panels and related technologies to secure energy independence.
• Long-term economic benefits as widespread solar energy adoption leads to lower electricity costs, potentially reducing overall expenses for industries and boosting economic growth.
• Governments crafting new policies and regulations to support and manage the transition to solar energy, including incentives for adoption and guidelines for grid integration.
• Job market transformation with new opportunities in solar panel manufacturing, installation, maintenance, and grid integration, accompanied by a decline in traditional fossil fuel-related jobs.
• Environmental benefits from reduced reliance on fossil fuels, leading to lower greenhouse gas emissions and a positive impact on air quality and public health.
• Social shifts as communities gain access to affordable and reliable solar energy, promoting energy equity and altering patterns of urbanization and rural development.

Questions to consider

• The value of solar power is declining annually. Do you believe that solar power will become the primary source of energy worldwide in the future?
• What potential scenario may threaten the future growth and/or dominance of solar power adoption?