New Era Opportunity: Solar Energy
Renewable energy is a trend set to supercharge during the new era.
While we’ve been using the same old fossil fuels for over a century, soon we’ll see a dramatic shift to renewable energy — specifically, solar power.
The renewable energy market is set to grow exponentially. But within it, solar is expected to grow even faster.
Currently, it only accounts for 15% of renewable energy generation in the U.S. But its share is expected to grow to 46% of renewable energy by 2050.
I think this estimate is way too conservative. We always underestimate the impact of new technology.
Just as every other technology improves with time, so does solar.
In fact, this improvement is happening right now, and three big factors are driving it:
- Solar is cheap and getting even cheaper. Bloomberg estimates the cost of solar energy dropped 89% since 2010. It’s expected to fall another 34% in the next decade and 63% by 2050.
- Solar efficiency is improving. The number of solar panels a house needs is determined through “conversion efficiency.” This measures how much of the captured sunlight will turn into electricity. A higher percentage of conversion efficiency means you need fewer solar panels to power your home. In 2018, the average solar panel was around 17.7%. Analysts estimate that by 2025, the average conversion efficiency will jump to 21%, and to 24.4% by 2040. So buildings would need fewer panels. However, this only tells part of the story… Newer, light-sensitive materials — like Perovskite — have the potential to get a conversion efficiency up to 66%. This would double what’s theoretically possible and lead to an even faster shift toward solar.
- Upgrades to battery storage. The race to build the electric vehicle created an 88% drop in prices for lithium-ion batteries in the past decade. Batteries are a game-changer for solar. They allow both residential and commercial installations to store the sun’s energy and then use it when needed. When you combine the potential growth surge of solar, U.S. energy battery storage capacity (in gigawatts) is expected to grow ALMOST 40-FOLD over the next two decades. That’s an astounding annual growth rate of 19.8%.
That’s why solar energy is the next Reset tipping-point trend.
This tipping point will have massive implications for the entire energy industry.
I see a world where fossil fuel plants are shut down, causing oil and gas companies to file bankruptcy.
But on the bright side, everyone will have access to cheap, renewable energy to power our homes and electric vehicles.
The New Era Will Supercharge the Solar Boom
While solar started as an environmentalist’s dream, the next phase will be an economist’s dream, as cheaper prices lead to higher demand and more supply.
In the U.S., solar capacity is expected to skyrocket sixfold over the next three decades, growing from 47.6 gigawatts in 2020 to 309.3 gigawatts in 2050.
That means powering up our electric vehicles and running our central air conditioning won’t break the bank or damage the environment. We’ll be doing more with less resources.
Some forecasts see solar growing from 2% of global electricity generation today to 22% in 2050. But I think this outlook is too conservative…
Technology grows exponentially. If we apply that theory to solar power, we will see a faster growth in conversion efficiency and cheaper, denser battery storage.
And we are already seeing this take place…
Residential U.S. solar PV installations have steadily increased over the past decade. From 2010 to 2020, more than 2 million residential solar panels were installed, supported in large part by the 30% federal investment tax credit.
The pandemic is accelerating this trend. According to data from real estate consultancy Otteau Valuation Group, families are ditching their $3 million New York City apartments in search for much larger homes in New Jersey.
In fact, new homes bought in New Jersey jumped 69% from last year. This will have a big impact on the future of solar, as new homeowners opt to add solar panels. But that’s only half of the story on solar…
The other half of solar’s boom is the drop in the cost of lithium-ion batteries.
You see, the big problem with solar power is that the sun isn’t shining when households consume the most energy — in the morning and the evenings. By adding a battery to an existing solar system, the sun’s energy can be stored to power homes when energy is needed most.
Thanks to tens of billions of dollars of automotive research, lithium-ion battery prices have dropped from $1,200/kWh (kilowatt-hour) in 2010 to under $200/kWh today. And costs are expected to continue dropping to $62/kWh by 2030.
We are heading to a tipping point where the cost of solar panels combined with a battery pack in the garage is cheaper than buying electricity from the power company. That’s why the new market for energy storage systems is expected to rise eightfold, from approximately 100,000 installations in 2019 to 800,000 in 2023.
According to my calculations, given the declining costs of solar and storage, we are only a few decades away from a future where every home produces and stores its own energy. We’ll wonder why we ever relied on corporate-controlled grids to power our lives.
A future where we only use renewable energy will take time. But throughout the years, public sentiment about solar has improved. In a recent Pew Research Center poll, 46% of U.S. homeowners have “given serious thought to adding solar panels at their home in the past year.” That’s a 6% increase from when the same question was posed just three years ago.
While 6% doesn’t seem like a high number, it equates to 7.7 million potential new customers.
As the new era leads to a homebuying surge, many of these new homeowners will add solar to their new homes. That’s why the solar industry will surge higher than the forecasts in the next few years.