Photovoltaics (often shortened as PV) gets its name from the process of converting light (photons) to electricity (voltage), which is called the photovoltaic effect. This phenomenon was first exploited in 1954 by scientists at Bell Laboratories who created a working solar cell made from silicon that generated an electric current when exposed to sunlight. First installed on satellites, costs have fallen dramatically over the decades and now PV is used in residential rooftops, commercial installations, and multi-GW utility-scale solar farms.
Solar photovoltaics have had a long history since the discovery of the photovoltaic effect in 1839. More than any other technology, solar PV has an extremely slow adoption curve. From 500 kW capacity in 1977 to 1,000 MW in 1999 to 1,000 TW in 2021. Solar PV R&D is focused on improving conversion efficiency and scaling lab efficiencies to mass production. As of 2021, solar PV is one of the cheapest forms of energy in many markets, using the decades-old crystalline silicon solar PV technology. The technology is commercially viable without subsidies today. Further cost reductions will come from efficiency improvements, economies of scale, and learning curves. The introduction of new materials and architectures like perovskites and Passivated Emitter and Rear Cell (PERC) is pushing real-world efficiency to nearly 25%. Emerging PV technologies, including multijunction cells and single-junction GaAs, have achieved lab efficiencies of 30-40%, which, if scaled, could bring the levelized cost of electricity (LCOE) to 2c/kWh for utility-scale photovoltaics (UPV). The solar PV market was worth $150 billion in 2022, growing at 8% to reach $250 billion by 2030. Generation increased by a record 179 TWh (up 22%) in 2021 to now exceed 1,000 TWh in capacity. LCOE is now lower or competitive with fossil fuels in most places, and efficiency gains through scaling up PERC and perovskites are close to commercialization.
On the demand side, the main driver is the Paris Agreement and the need to decrease global carbon emissions by 45% by 2030 and reach net zero by 2050. To meet net-zero targets, 455 gigawatts of solar PV need to be installed each year until 2030 (3.2 times the 2020 total). The drive for energy independence since the Russian invasion of Ukraine in early 2022 and the subsequent increase in energy costs globally has increased policymakers' appetite for home-grown energy like solar and wind. On the supply side, the cost of solar PV has fallen by over 90% in the last 10 years. The cost of lithium-ion batteries has fallen by 97% in the last 30 years. Costs continue to fall for both technologies, making solar + storage a viable alternative to gas peaking and coal plants.
Energy and electricity generation sources compete on price, reliability, resource requirements, and carbon intensity. Solar PV competes with Wind Power as the cheapest new generation source, with Generation IV Nuclear Reactors and Small Modular Reactors (SMRs) in the mix too because of the baseload features. Solar fares poorly for reliability, even worse than wind, but solar+storage solutions are improving, although LCOE will struggle to compete in the next decade. Solar is much cleaner than alternatives but, like wind, has environmental issues around the use of heavy metals, such as Cadmium Telluride for thin-film cells, and the difficulty in recycling. Solar, like wind, can be distributed and isn’t dependent on any particular country or commodity in the same way hydro or nuclear power is. To be clear, solar is not the one-source to rule them all; it will be deployed with wind and nuclear depending on LCOE. Stationary Energy Storage
There are few barriers to widespread diffusion. Until recently, higher costs relative to fossil fuels, lack of storage capacity, and grid capacity constrained growth. Costs of solar PV and storage vary and are impacted by tax subsidies if they exist, but at a levelized cost of between $30-40/MWh for new utility solar, it compares favorably with gas peaking at $150-200/MWh, nuclear $130-200/MWh, coal $65-150/MWh, and gas $45-75/MWh. In fact, solar PV in many places has an LCOE competitive with the marginal cost of fossil fuels and nuclear. The 97% decrease in battery costs since the early 90s alsos makes solar-and-storage solutions viable, dispatchable generation addressing the biggest concern over solar and renewables for the energy grid.
Solar, as important as it will be to the energy transition, will still only contribute about 25% of electricity generation by 2050, with electricity about 25% of primary energy demand. For context, fossil fuels are still likely to contribute 50% of primary energy in 2050. This is highly impactful in terms of directly reducing 21% of CO2 emissions and all the associated environmental and health benefits that will come from that. A high impact scenario sees solar costs fall faster than predicted to the point where it significantly increases energy consumption, supporting energy-intensive processes like Carbon Capture, Utilisation & Storage and Green Hydrogen. A more probable lower impact scenario is that solar replaces energy generation and does not expand consumption in a meaningful way as is possible with Deep Geothermal Energy or Nuclear Fusion.