Solar power’s spectacular rise: global energy revolution underway

Global investment in clean energy technologies is expected to reach $2,000 billion by the end of 2024. Of that investment, more than $500 billion will go to photovoltaics (PV), making solar energy the most funded power generation technology for the second year in a row, according to the International Energy Agency (IEA) World Energy Investments 2024 report. By 2023, renewable energy capacity had increased by almost 50% to more than 500 GW, marking 22 years of continuous growth. Most of that growth – more than three-quarters – came from solar energy.

Lower costs and greater competitiveness

This shift to a cleaner energy mix has led to increased access to cheaper electricity. By 2023, 96% of new utility-scale solar PV capacity will have lower production costs than new coal- and natural gas-fired plants. Moreover, IEA data shows that the levelized cost of electricity (LCOE) of solar PV plants in China, the European Union and India is lower than that of existing coal- and gas-fired plants. Solar PV spot prices continue to decline, falling by almost 50% by 2023. In Spain, solar capture prices in May were 58% below the average monthly spot price of €17.67/MWh, while in Germany they fell below €40/MWh, the lowest levels since summer 2020.

Tax incentives and regulations

In the United States, a June report from Lawrence Berkeley National Laboratory found that solar power, as a fuel-free source of generation, offers opportunities to hedge against rising wholesale costs. Solar costs in the United States should continue to fall thanks to new tax breaks introduced by the Inflation Reduction Act (IRA). The IRA, signed by President Joe Biden in August 2022, offers subsidies to private and public entities through financial incentives such as investment credits and tax breaks. This should help the United States meet its goal of reducing emissions by 50% to 52% below 2005 levels by 2030.

Global expansion of solar power

In Europe, the Net-Zero Industry Act, which came into force on June 29, aims to boost production capacity for clean technologies such as photovoltaics to 40% of the EU’s annual deployment needs by 2030. In China, the world’s largest photovoltaic market, demand for solar modules will exceed half of global demand by 2023. Platts PV Installations Tracker Q1 2024 forecasts 56 GW of new solar installations in China this year, followed by 16.6 GW elsewhere in Asia Pacific.

Forecasts and future prospects

Global demand for solar energy is set to continue to grow, with manufacturers planning to add 309 GW of solar module capacity over the next two years. Analysts at Commodity Insights forecast an increase of 4.3 TW of global solar capacity between 2024 and 2030, bringing the total installed capacity to 5.9 TW. Solar energy is set to become the most widely installed energy source in the coming decades, with more than 4 TW of new installations expected by 2030. Renewable energy sources are expected to supply 42% of the world’s electricity by 2028, with more than half of that coming from photovoltaics and wind. The growing presence of solar in the global energy mix means that the technology will become a major driver of electricity prices in decarbonized systems. Solar module prices, like other commodities, are not immune to external influences, such as the oversupply in Asia that has driven solar module prices down over the past 18 months. Platts’ new solar module pricing, launched on July 1, will help track the solar revolution and provide market transparency with daily prices for Europe, China and the US.