Solar photovoltaics on course to dominate energy markets

Based on a data-driven model of technology and economics, the study found that solar photovoltaics is likely to become the dominant power source before 2050.

The report cautions that four ‘barriers’ could hamper this, namely the creation of stable power grids, financing solar in developing economies, capacity of supply chains, and political resistance from regions that lose jobs.

The researchers said policies resolving these barriers may be more effective than price instruments such as carbon taxes in accelerating the clean energy transition.

The study, led by Exeter University and University College London, is part of the Economics of Energy Innovation and System Transition (EEIST) project, funded by the Department for Energy Security and Net Zero and the Children's Investment Fund Foundation (CIFF).

In a statement, Dr Femke Nijsse from Exeter’s Global Systems Institute said:  “The recent progress of renewables means that fossil fuel-dominated projections are no longer realistic. In other words, we have avoided the ‘business as usual’ scenario for the power sector.

“However, older projections often rely on models that see innovation as something happening outside of the economy. In reality, there is a virtuous cycle between technologies being deployed and companies learning to do so more cheaply.”

Dr Nijsse continued: “When you include this cycle in projections, you can represent the rapid growth of solar in the past decade and into the future. Traditional models also tend to assume the ‘end of learning’ at some point in the near future – when in fact we are still seeing very rapid innovation in solar technology.

“Using three models that track positive feedbacks, we project that solar PV will dominate the global energy mix by the middle of this century.”

The researchers warn, however, that solar-dominated electricity systems could become ‘locked into configurations that are neither resilient nor sustainable, with a reliance on fossil fuel for dispatchable power’.

Instead of trying to bring about the solar transition in itself, governments should focus policies on overcoming the four key barriers:

Grid resilience: Solar generation is variable (day/night, season, weather) so grids must be designed for this. Methods of building resilience include investing in other renewables including wind, transmission cables linking different regions, extensive electricity storage and policy to manage demand (such as incentives to charge electric cars at non-peak times). Government subsidies and funding for R&D are important in the early stages of creating a resilient grid.

Access to finance: Solar growth will depend on the availability of finance. Currently, low-carbon finance is highly concentrated in high-income countries. Even international funding largely favours middle-income countries, leaving lower-income countries – particularly those in Africa – deficient in solar finance despite the enormous investment potential.

Supply chains: A solar-dominated future is likely to be metal- and mineral-intensive. Future demand for critical minerals will increase. Electrification and batteries require large-scale raw materials such as lithium and copper. As countries accelerate their decarbonisation efforts, renewable technologies are projected to make up 40 per cent of total mineral demand for copper and rare earth elements, between 60 and 70 per cent for nickel and cobalt, and almost 90 per cent for lithium by 2040.

Political opposition: Resistance from declining industries may impact the transition. The pace of the transition depends on economic decisions by entrepreneurs, and how desirable policy makers consider it. A rapid solar transition may put at risk the livelihood of up to 13 million people worldwide working in fossil fuel industries and dependent industries. Regional economic and industrial development policies can resolve inequity and can mitigate risks posed by resistance from declining industries.

The study has been published in Nature Communications.