415 GW and Beyond: Role of Solar Energy in Meeting Global 2030 Climate Goals

The urgency for a global shift towards sustainable development, primarily driven by renewable energy, is undeniable. Both developed and developing economies have embraced the need to limit the increase in global temperatures, as agreed in the Paris Agreement (COP21). This agreement set ambitious goals for nations to work towards keeping the global temperature increase to well below 2°C above pre-industrial levels, with an aspirational target of limiting it to 1.5°C. Needless to say, the pace of global solar energy growth will be crucial in realizing these ambitious goals. 

Building on the foundation of COP21, COP28 in 2023 marked another significant milestone in the fight against climate change. Nearly 120 countries pledged to triple their renewable energy generation and double their energy efficiency by 2030. 

Solar Energy: The Key to Meeting Global Energy Demands

Renewable energy, especially solar power, has seen tremendous growth over the past decade. In 2022 and 2023, both solar and wind energy reached a significant milestone: 1 terawatt (TW) of cumulative installed capacity.  report titled ‘Powering a Green Future: A Forecast to 2030 for Solar and Energy Storage’ by Taiwan based research firm InfoLink Consulting, highlights the frenetic growth seen in the renewable energy market, powered by Solar energy.

By 2030, global electricity demand is projected to reach 37,091 TWh, growing at an annual rate of 3.1%. By 2050, this demand is expected to hit 60,777 TWh. In order to meet these rising demands sustainably, the world needs to dramatically increase its renewable energy capacity. Specifically, the report estimates that we need 8.5 TW of cumulative renewable energy capacity by 2030 to limit global warming to 1.5°C. Encouragingly, the world is on track to surpass 10 TW of renewable energy capacity by 2030. 

Solar in Major Markets: China, US, and Europe

Solar power has emerged as a critical player in renewable energy development. In 2023, global solar installations surged to 415 GW, a 66% increase compared to 2022. This brought the total installed solar capacity to over 1,500 GW. By 2030, global new solar energy installed capacity is projected to be around 900 GW annually, resulting in cumulative installed capacity of 6 TW.

China has been a leader in this growth, adding 216 GW of solar capacity in 2023 alone. This represents a staggering 148% increase from the previous year. However, challenges such as grid capacity limits and local regulations may slow China’s future solar installation growth. From 2024 onwards, China’s annual new capacity additions will expectedly reach 400 GW by 2030 as the cumulative installed capacity will surpass 2,700 GW. Although the projected rate of growth is lower than that in 2022 and 2023, China will remain the world’s largest solar market  by a distance. 

The United States also saw a notable increase in solar capacity, adding 32.4 GW in 2023, a 62% year-on-year rise. This brought the cumulative solar capacity of the US to 174.4 GW. However, tariffs on solar imports from Southeast Asia may challenge the future growth in the US solar market.

In Europe, new solar installations reached 62 GW in 2023, reflecting a 35% increase from the previous year. As many European countries update their National Energy and Climate Plans, the demand for solar energy in the region is projected to keep rising. To meet these targets, EU member states will need to implement more supportive policies to accelerate solar deployment. New solar capacity is expected to grow steadily each year, potentially adding 140 GW annually by 2030. The REPowerEU initiative’s goal of 600 GW is anticipated to be achieved ahead of schedule, between 2026 and 2027, with cumulative installed capacity likely to exceed 1,000 GW by 2030.

The Role of Falling Costs in Solar Energy’s Growth

A key driver behind the rapid growth of solar energy is the falling cost of solar technology. As new polysilicon capacity came online in 2023, the solar supply chain became surplus, pushing prices down across the board. By 2024, it is estimated that the average price of solar modules will drop further, leading to a decrease in the levelized cost of electricity (LCOE) for solar energy.

For example, in China, the LCOE of solar generation fell to USD 26.57/MWh in 2023 and is expected to decline further to USD 24.45/MWh in 2024. Similar trends are seen in the US and Europe, where the LCOE for solar power is also falling due to declining module prices and improvements in solar technology.

This reduction in costs, combined with technological advancements such as the rise of TOPCon solar cells, which are more efficient and durable, is making solar power more competitive with traditional energy sources. In the US, for instance, the LCOE for solar energy is expected to fall to USD 43.42/MWh in 2024, thanks in part to the incentives provided by the Inflation Reduction Act (IRA). Today in fact, there are barely any significant markets worldwide where solar is not the most competitive energy source, if the sun shines enough there.  

The Future of Solar: Technology and Policy Innovations

The future of solar energy is not only about increasing installed capacity but also about advancing technology and ensuring supportive policies. TOPCon solar technology, which offers higher efficiency and better energy output in low-light conditions, is expected to become the mainstream solar cell technology in the coming years. By 2024, it is predicted that TOPCon will account for 70% of the solar market.

In addition to technological advancements, policy support is crucial for driving the adoption of solar energy. In the US, the IRA provides USD 369 billion in incentives for renewable energy projects, while Europe has introduced the REPowerEU plan to accelerate solar deployment across the continent.

Capacity Expansion in Non-China Regions

A notable shift is taking place in the global solar manufacturing landscape, with increasing emphasis on capacity expansion outside of China. The Russia-Ukraine war and ongoing trade barriers have intensified the focus on energy independence, driving solar capacity expansion across regions such as Southeast Asia, India, the Middle East, and the US.

Southeast Asia, for example, has become a critical manufacturing hub. In 2023, the region had 85.2 GW of annual cell capacity and 107.7 GW of module capacity, largely driven by Chinese companies establishing production facilities in countries like Cambodia, Malaysia, Thailand, and Vietnam. Plans are already underway to further increase wafer capacity to over 50 GW by 2024​.

In the Middle East, countries such as Saudi Arabia and Turkey are leading the charge. Annual module capacity in the region exceeded 20 GW in 2023, with Turkey emerging as a key player. By 2024, module capacity is expected to reach 30 GW, with expansion plans driven by both local and foreign manufacturers​.

India is also seeing significant solar capacity expansion, supported by policies like the Production Linked Incentive (PLI) scheme. As of 2023, India had 12.6 GW of annual cell capacity and 53.4 GW of module capacity. However, the country still faces challenges in developing upstream capacity, particularly in wafer manufacturing, despite ongoing plans​.

These expansions reflect a broader trend toward diversifying global solar supply chains and reducing dependence on a single region, particularly China. Countries are aiming to boost local manufacturing and increase energy security by investing in solar technologies and expanding production capacities across various sectors.

Challenges and Opportunities Ahead

While the growth of solar energy is promising, challenges remain. High interest rates, grid capacity limitations, and labour shortages pose significant obstacles to further expansion. In many countries, such as China and the US, grid overload and transmission issues are already causing delays in solar project approvals and installations.

Moreover, geopolitical tensions and protectionist policies, such as tariffs on solar imports, could hinder the global solar supply chain, particularly in the US and Europe. However, these challenges also present opportunities for innovation and investment in local manufacturing and grid infrastructure.

Thanks to falling costs, technological advancements, and supportive policies, solar energy is poised to become a dominant force in global electricity generation by 2030. However, achieving the ambitious targets set by international agreements like COP21 and COP28 will require continued investment, innovation, and collaboration between nations. As the world continues its journey toward net-zero emissions, solar energy will undeniably play a critical role in shaping a sustainable future for generations to come.