How does the future of the solar energy market look? Brighter than ever!

Solar is the Bitcoin of future energy. Investors are interested in the solar energy market more than ever and those who can’t see its potential are missing out. Let’s talk about how solar power becomes our go-to energy choice, what holds it back and how solar panels are going to change in the future.

Growth: World leadership in 5 years

Looking back In 2002, there were only 2 gigawatts of installed solar power globally — hardly enough to power a small city. Over the course of 20 years, the total power capacity of solar energy has grown 500 times and reached 1 terawatt in 2021.

So far, solar power only covers 4.5% of the world's electricity production. However, in the next 5 years, the International Energy Agency (IEA) expects solar power to almost triple and reach an installed capacity of 2,350 gigawatts. By 2024 solar will surpass hydropower in total installed capacity, outgrow gas by 2026 and then coal by 2027, becoming the largest source of electricity in the world. That’s why the solar energy market forecast is only getting sunnier.

Asia leads, US tries to keep up

Asia is where solar energy blooms and prospers. China alone has over 430 gigawatts of solar power capacity — not too far below what the rest of the world has installed. The largest manufacturers are either Chinese or have manufacturing facilities in China: Jinko Solar, Trina Solar, JA Solar, LONGi Solar, Canadian Solar. Looking at the top manufacturers, you can recognize a few popular names: Japanese company Panasonic, and Korean brands LG and Hyundai.

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Not just China: Where solar panels are made

Although China installs solar the most, the United States tries to keep up. American solar power capacity amounts to about 153 gigawatts. The industry grew by about a record 32 gigawatts of new solar power capacity in 2023, up 53% on growth in 2022! Overall, photovoltaic solar (PV) accounted for 54% of all new electricity-generating capacity additions in the first quarter of 2023.

The European solar panel market grows steadily as well. Solar power is the most popular in Germany with around 70 gigawatts of solar power installed, followed by Spain (26GW) and Italy (25GW). However, the European solar industry is troubled by cheap Chinese panels that flood the market and force companies to lower their prices.

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What's the reason for solar power’s sudden rise in popularity? Let's talk about the pros of solar power.

Pros: The cheapest energy in history

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How did solar become the cheapest energy in history

The key to the solar power industry growth is its low price. Over the past 10 years, the cost of panels has fallen by 80%. In the early 2010s, one megawatt-hour of solar energy cost over $350. You could get the same megawatt-hour with coal and gas for $100. In 2022, a megawatt-hour of solar energy fell down below $20. It's the cheapest energy source in history, according to the IEA. And the prices for solar panels still go down!

The big advantage of solar power is that it can be used by homeowners, unlike geothermal or hydroelectric power. A solar system on the roof produces enough electricity to cover the needs of a house. If panels produce more power than needed, the excess can even be sold to the grid. In the US, a home solar system saves you $100-$150 a month, depending on the state. Panels pay for themselves in 7-8 years, and last more than 25 years. Many Americans look at solar as a good long-term investment.

Another benefit of solar power is that it’s green. Solar panels don’t produce carbon emissions. That is why scientists are pinning their hopes on solar energy in the fight against climate change. Developed countries are focused on replacing fossil fuels with green energy. Among all renewables, solar is growing the fastest.

Not everything is equally good about solar energy though. Let’s talk about its disadvantages.

Cons: Clouds and recycling

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How much energy does a solar panel produce?

The biggest problem with solar panels is their variable production. Their performance depends on irradiance: on cloudy days the panels’ output drops by 20-40% and at night they don't work at all. On one hand, it’s a problem for homeowners: if you want to live in a home powered only by solar energy, you'll always have to add batteries to the system. On the other hand, variable production of home solar systems is a problem for the grid operators who have to match supply of energy with demand.

A solar panel system is a serious commitment. Upfront cost of a home solar system is still high — around $10,000 if you pay in cash. Panels become part of the house, and if you ever move, it’s going to be difficult to take them with you to a new place. However, if you decide to sell your house, solar panels will increase its value by an average of 4%, according to real estate company Zillow.

Another problem is that we don’t have a good way to recycle PV modules yet. Solar panels are mostly aluminum and glass which are hard to reuse. There are private companies that are ready to take on this problem, such as Solarcycle. In some countries recycling projects are already underway — for example, the US plans to launch a recycling program in Washington by 2025.

Future: Floating PV plants and solar cloth

There are lots of fresh developments in the field of photovoltaics and solar power market is only going to benefit from them. What new technologies can we expect to see in a few years? Let's take a look into the future. 

People have learned how to install solar panels not only on land but also on water. Floating solar plants are great news for countries where every square meter of land counts. Floatovoltaics also work better: water cools PV modules and their production is 5-10% higher compared to land PV systems.

The Japanese have developed a fabric with photovoltaic elements. You put on a jacket made of solar fabric, connect the jacket to your phone, and it won't go dead while you're walking down the street and listening to music. It may sound like science fiction, but the crudest prototypes can already be found on Amazon.

Solar skins will turn panels into advertising space. Such skins let the sunlight for the panel through and display anything on its surface. Not only can you display ads, but skins will also make blending solar panels with the roof easy. Read more in our article “5 new solar technologies to change the future of energy landscape”.

Sergey Fedorov

Co-founder & CTO

Sergey has been running A1SolarStore since 2017 with the main idea in mind – making going solar easier for everyone. Based on a thorough market research and his personal experience, he shares his ideas on both solar industry and management related topics.

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