Solar energy has experienced a remarkable reduction in its cost over the past decade, plummeting by 89% from 2010 to 2022, according to recent research from the University of Copenhagen’s Department of Geosciences and Natural Resource Management. This decrease is accompanied by a similar cost reduction in batteries, which are crucial for storing and balancing solar energy.
The researchers have used a macroeconomic model that incorporates the latest technological and economic data from 70 regions worldwide to make a projection: solar energy is on track to constitute more than half of global electricity generation by the mid-century, even without more ambitious climate policies.
The key drivers of this solar energy expansion are its affordability and rapid construction timeline. Solar farms can typically be completed within a year, much faster than the construction of offshore wind farms, which can take up to three years. This rapid construction timeline allows investors to take advantage of solar energy’s cost-effectiveness sooner, creating a self-reinforcing cycle where experience leads to further price declines.
The study predicts that the average cost of generating electricity through solar energy will decrease by 60% from 2020 to 2050, even when accounting for the growing demand for energy storage. By 2030, solar energy combined with storage is expected to become the cheapest option for generating electricity in nearly all regions worldwide, and it is projected to be 50% less expensive than building new coal-fired power plants in several major regions.
The researchers emphasize the need for electricity grids to be designed with flexibility to accommodate the variability of solar energy, which is dependent on factors like time of day and weather conditions. Energy storage, expanded transmission networks, and other complementary renewable energy sources like wind will be essential in this context. Additionally, the growth of solar energy will lead to increased demand for critical metals and minerals, necessitating recycling initiatives and diversification of global mining activities.
Access to financial resources is another critical factor, and it is essential to ensure that funding is distributed more equitably, particularly in developing countries. Mechanisms that mitigate currency and investment risks can help unlock international capital flows.
The solar revolution is here, and countries and regions that do not integrate renewables into their energy mix risk falling behind, particularly in their industrial sectors. Accelerating efforts to embrace solar energy, along with investments in complementary technologies, will be crucial to avoid the financial burden of stranded fossil fuel assets. The transition to a new era of solar energy is underway, and the time for embracing it is now.