Investments in solar exceed those in other technologies. The production of solar cells, lithium batteries, foundries are accelerating.
Investments in solar will reach $500 billion this year and will exceed for the second year in a row the flow of resources dedicated to all other cumulative electricity technologies, according to the (always conservative) calculations of the International Energy Agency. This growing wave of capital, attracted by the continuous decrease in costs and the great flexibility of use, will finance the production of 70 billion solar cells, which will power individual homes, energy communities, large industrial plants and electricity grids, without making noise, without emitting fumes, without burning fuels and without costing anything for decades.
First source of energy
These cells, which currently cover less than 10 thousand square kilometers of the earth’s surface, generated 1,600 terawatt hours of energy in 2023, or 6% of the world’s electricity. It seems little, but the revolutionary character of solar is its growth rate. In 2004 it took a year to install one gigawatt of solar capacity, in 2010 a month, in 2016 a week and in 2023 less than a day. Last year, the world’s solar capacity reached 1,419 gigawatts and for this year analysts at Bloomberg New Energy Finance predict about 600 gigawatts of new capacity: almost twice as much is installed every day as twenty years ago as was done in a year. At this rate, solar will produce more electricity than nuclear in 2026, wind in 2027, hydropower in 2028, gas in 2030 and coal in 2032. The IEA predicts that the sun will become humanity’s largest primary energy source – not just electricity – by 2040.
The collapse of costs
The growth of solar does not depend on the climate policies of governments, but on its affordability. In 50 years of life, the cost of a solar megawatt hour has dropped by more than a thousand times and this trend continues, regularly beating all forecasts. Today, the cost of electricity (LCOE) for solar and onshore wind is about $40 per megawatt hour, lower than that of coal, which is the cheapest of fossil fuels. The only problem is that the vast majority of solar cells and almost all purified silicon come from Chinese industry, which has enough room to maintain this pace of expansion in the years to come, also thanks to the help of the government. Chinese control over this technology is certainly less problematic than OPEC’s control over the price of oil, but it remains worrying. Western industry, however, still has time to react, given that almost all the demand for solar is concentrated in the future.
The Solar Cell Industry
The raw material of solar cells, in fact, is easily found: it is quartz sand, a crystalline form of silicon. To purify it, it is heated to 1,900 °C in electric arc furnaces with a certain amount of carbon in the form of coke. The oxygen in the sand reacts with the carbon to release carbon monoxide: what remains is molten “polysilicon”, which is then cooled, crushed and reacted with hydrochloric acid to produce a liquid called trichlorosilane, then distilled repeatedly to remove all traces of impurities. The most advanced foundries work at “10 nines”: this means that their polysilicon is 99.999999999 percent pure. Until the early 2000s, the only products worth this kind of effort were the wafers with which chips were produced. The solar cell industry lived on cut-outs. But the increase in demand for photovoltaics has changed the situation and Asian companies have started to invest in foundries dedicated to the photovoltaic industry. This is how Beijing has built its monopoly: in 2023, Chinese companies produced 93% of all the world’s polysilicon destined for solar. Some have expanded vertically and also produce cells. Others leave it to their customers to cut the ingots into wafers, polish them, and do the “doping” that turns silicon into a semiconductor.
China’s two largest polysilicon producers, GCL-Poly and Tongwei, each had a production capacity of 370 thousand tons in 2023, enough to cover demand. Tongwei is investing $3.9 billion to double production. Overall, China has plants in the pipeline capable of producing 7 million tons per year, enough for 3.5 terawatts of solar panels, six times the installed capacity this year. In terms of polysilicon, these are huge quantities, but compared to the material requirements of other energy technologies, they are minuscule. Coal production amounts to about eight billion tons a year, with oil and gas doubling. In solar there is still ample room for growth, for those who want to take advantage of it. Furthermore, the production of solar cells does not entail a lasting competitive advantage: they are standardized products, all made in almost the same way and without barriers to entry. Manufacturers compete on cost, churning out slightly more efficient cells
or less expensive.
Lithium batteries
The same goes for lithium batteries, which complete the energy offer of solar. Batteries are also mass-producible and are targets of Chinese industrial policy, so they are moving along an even steeper curve than that of solar: the cost of a kilowatt hour of storage has decreased by 100% in the last 30 years. In California, where there are 40 gigawatts of solar and 10 gigawatts of batteries, batteries are the main source of power on the grid on many evenings. It can be done.
