Solar Panels: The Quest for Better Return on Investment

Solar has maintained its status as the fastest-growing electricity source. Photo by Nuno Marques on Unsplash

Solar energy has achieved critical mass today and has become a leading source of clean energy. According to a recent report by global energy think-tank Ember, solar power is the main component of the record 30% share of renewable electricity achieved in 2023. This is a commendable growth from the 19% share of renewables in 2000, and a phenomenal increase of wind and solar power from a mere 0.2% to a record 13.4% during the same period. The report also notes that solar power contributed twice as much new electricity generation as coal in 2023. It further explains that this amazing boom in solar capacity is due to steep declines in costs, supportive policy environments, technology efficiency improvements, and increased manufacturing capability. The report was compiled after analysing electricity data from 215 countries in all. The latest data for 2023 was accessed from 80 countries representing 92% of global electricity demand. A notable finding is that there are now 33 countries with more than 10% share of solar generation, including Chile (20%), Australia (17%) and the Netherlands (17%). The state of California in the USA at 28% has reinforced its status of a pioneer in the war against climate change.

During the last nineteen years, solar has maintained its status as the fastest-growing electricity source and in the process has surpassed wind power generation capacity in the previous two years. However, it may be noted that wind energy is also an indirect form of solar energy, since wind is generated by uneven heating of the atmosphere by the sun! For the record though, wind still provided a higher share of global electricity in 2023 – 2,304 TWh, accounting for 7.8% of the total power generation. Solar has now reached 5.5% share of the global electricity mix with 1,631 TWh, up from 4.6% in 2022. These developments certainly augur well for a world striving to achieve Net Zero by 2050 – in fact, a must do – if the global menace of greenhouse gas (GHG) emissions and consequent threat of climate change has to be brought to a halt.

Solar power – the energy derived from the sun – is the most abundant power resource available on Earth, and has been in use from time immemorial. Archaeological evidence suggests humans first made use of solar energy as early as in the 7th century BC to start fires with rudimentary magnifying glasses. Centuries passed during which various other uses were made like drying of foodgrains and building dwellings to make the best use of sunrays to provide warmth. However, the first experimental photovoltaic (PV) cell was built only in 1839 by French physicist Edmond Becquerel. More than 100 years later, the first practical PV cell was publicly demonstrated at Bell Laboratories in 1954 by inventors Calvin Souther Fuller, Daryl Chapin and Gerald Pearson. This was followed by the first ever use of the solar PV cells for generating electric power in 1958 by NASA for the Vanguard 1 satellite launched by the US. Use of solar power for satellites and space stations became the norm following this pioneering attempt. These early solar PV panels were not exactly cheap – it cost a whopping $100 approximately per watt of power or more – but they provided the best power-to-weight ratio, which for space applications was a great advantage.

Cost is the key
This impressive ramping up of solar power generation capacity has not happened in a vacuum. It is the result of a host of factors that may be summarised as:

Before proceeding to examine the issues related to improved RoI of solar PV cells, it would help to first understand a few of these factors a bit more.

1. Cost reductions in solar PV technology
What was a classic ‘chicken and egg’ situation – the cost of solar panels will come down with increased demand and increased demand will bring the cost down – finally sorted itself, with the much needed nudge provided by environmental imperatives.

The cost of solar PV cells has in fact declined dramatically over the past few decades. This has been achieved thanks to technological advancements as well as manufacturing efficiencies, but also in no small measure due to supportive policies, but more of this later. Until the mid-1970s, solar PV cells were used only in niche applications like satellites and space exploration as well as in remote locations with no grid power. The cost of solar PV modules during this period was approximately $77 per watt. By early 1990s, with improved silicon purification processes, increased production scales and government incentives, there was a dramatic decline in prices to around $10 per watt. As manufacturing volumes have increased, the cost of producing solar panels has significantly decreased. Further advances like high-efficiency solar cells, bifacial panels, and improved module designs also helped lower costs per watt. Automation and better production processes also reduced material waste and improved panel quality. As a result the cost today has come down to around $0.20–$0.30 per watt.

2. Supportive policies and incentives
Though technology facilitated the dramatic drop in prices of solar panels, it happened in tandem with supportive and proactive government policies. In order to encourage businesses and individuals to opt for installation of solar PV panels for power generation, most governments offered a combination of subsidies, tax incentives and depreciation benefits. More important are government policies regarding pricing and net metering that allow domestic solar system owners to feed excess electricity back into the grid and receive credits. Most important, though, is the role of the government in facilitating large solar farms as land is the most precious resource. Active government involvement also helped in getting research support to help advance solar energy technology as well as attract investments for large scale solar parks.

3. Advances in energy storage
The third most important aspect when it comes to solar power is energy storage. Without storage, electricity must be generated and consumed at the same time, which is easy for conventional electricity generation whether thermal power plants or hydropower or even captive power generation where the volume of electricity generated is controlled as per demand. In solar power, electricity is generated only during daylight hours so it must be stored for use during the night. Batteries offer the most common and convenient form of storage as these store energy in chemical form and release as electricity as and when required. There are other storage methods like Thermal Storage, which involves storing electricity as heat, which is later used for heating directly or to generate electricity; and Mechanical Storage with pumped hydro systems, where electricity is used to pump water into reservoirs, which is then used as hydropower to generate electricity when required. With advances in battery technology, Battery Storage is the preferred option with both, increased efficiency and reduced cost of batteries.

According to the report, ‘Renewable Power Generation Costs in 2022’, published by the International Renewable Energy Agency (IRENA) in August 2023, in 2022, the global weighted average levelised cost of electricity (LCOE) from newly commissioned utility-scale solar PV, onshore wind, concentrating solar power (CSP), bioenergy and geothermal energy all fell, despite rising materials and equipment costs. In the case of solar PV power generation, there was an amazing decline in the cost over a period of just 12 years. Sample this – in 2010 solar power was 710% more expensive than the cheapest fossil fuel-fired solution, but in 2022, it actually cost 29% less than the cheapest fossil fuel option!

How the RoI is improving further
From the information presented in the preceding paragraphs, it now becomes easier to appreciate how the return on investments (RoI) in solar power has improved dramatically over the years. In general, the payback period for solar panels is usually between 3-5 years for commercial and industrial consumers, and 4-5 years for residential consumers. Solar investments can offer a potential RoI of 10-12%. If this is attractive enough, the good news is there is further scope for improvement which is expected from a host of factors and innovative uses of technology harnessed specifically to extract more power from solar PV cells, besides continuous efforts to improve their efficiency further.

What exactly are these factors that can further improve the RoI in solar power?

Improving efficiency of solar PV cells
Historically, the efficiency of solar PV cells has improved slowly yet continuously during the last 70 years. In the early 1950s, the primitive solar PV cells had an efficiency of a mere 2%, but today the average efficiency is about 24% which is quite substantial. What is more, ongoing R&D efforts across the world have shown promising results with efficiencies ranging from 20-40% achieved under laboratory conditions. It is important to remember that it is sunlight that reaches a PV cell which is converted into electricity, and not the heat. In fact, solar panels work best at low temperatures, and the ability of the cells to absorb light. That apart, multiple factors in solar cell design play different roles in limiting a cell's ability to convert the sunlight it receives. Designing the cells and panels with these factors in mind is how higher efficiencies can be achieved. In reality though, actual efficiency obtained with the same type of cells varies significantly depending on factors like temperature, sunlight intensity, and shading and installation angle of the solar panels. Other reasons for poor efficiency are related to age and degradation of the panels; poor maintenance with dust, dirt, and debris accumulating on them; wiring and electrical losses, reflection and absorption losses and even the efficiency of the inverter used. Besides, there is also the phenomenon of ‘Direct Recombination’ where light-generated electrons and holes recombine, reversing the process from which electricity is generated in a solar cell.

Advancements in solar technology
Apart from the improving efficiency of solar PV cells, there were other advances also taking place simultaneously. The cells are assembled into panels and that too is an area of improvement. For example, thin-film solar panels are cheaper to manufacture and can be integrated into building materials. Panels, even if mounted in fixed positions, if tilted at a certain angle when mounting, can maximum exposure to sunshine depending on the location of the site. This is today facilitated by adopting digitalisation, which can help reduce costs across the design, installation, and operation and maintenance stages of a solar PV system. Of special relevance are software-based energy management systems that can monitor and control energy production and consumption in real-time. This allows users to make more informed choices about their energy use and cut down on waste.

Solar trackers & concentrators
In normal course most solar panels are mounted in a fixed position which means the sun rays falling on them are not constant. For best results, the solar panels have to continuously face the sun, and this is where solar trackers come into picture. A solar tracker is a device that moves solar panels to face the sun, which increases the amount of sunlight they can absorb and generate more solar power. Solar trackers can be single-axis or dual-axis, and can increase a solar panel's efficiency by up to 45%. However, solar trackers require more maintenance than fixed systems. A solar concentrator on the other hand uses mirrors to reflect sunlight onto a solar panel, which increases the amount of light the panel receives and produces more electricity. Solar concentrators can be made from a variety of materials, including stainless steel, aluminum alloys, silver coated polymers, or silver coated hardened glass. The angle of the mirrors depends on the latitude of the installation.



Solar trackers can increase a solar panel's efficiency by up to 45%. Image credit: Nextracker

Solar trackers and concentrators come at a cost – on an average they add 2-10% upfront to a typical solar installation, besides maintenance. Dual axis trackers are more expensive than single axis and cost more, but since they also improve the efficiency of the solar panels substantially, the cost is amply justified on the RoI parameters. Besides, as happened with the solar PV cells, with wider usage and increased demand, the cost of solar trackers is expected to come down.

Artificial intelligence and smart grid integration
Artificial Intelligence (AI) takes digitalisation to the next level and adds many more layers of efficiency to it by not only improving efficiency, but also adding predictive maintenance, forecasting, and customer experience to it. AI actually helps in other advancements mentioned earlier, by helping optimise panel position and angle, and fine tune smart energy management and grid integration that add to the efficiency already achieved by other means and methods. Like it does to almost all other fields, AI in solar is driving innovations to another level. AI-based monitoring systems powered by advanced sensors analyse all data in real time to detect anomalies and rectify them at the earliest, almost eliminating downtime. Last but not the least, AI helps in accurate forecasting of energy requirements by studying consumption patterns and weather related data as well as historical patterns.

Building-integrated photovoltaics
With the proliferation of solar power, in order to make the best use of space there has emerged the concept of Building-integrated photovoltaics (BIPV) where solar panels are integrated into the building structure to generate electricity and perform other building functions. BIPV can improve the RoI for solar power in several ways that in fact offer a win-win situation:

One of the most promising technologies in the solar PV cells evolution is perovskite solar cells, made from perovskites – a semiconductor material known for its crystal structure resembling perovskite minerals. Perovskite materials are already in use in fuel cells and catalysts, so their ability is known, as is their potential for high performance and low production costs in solar cells. There are also perovskite-silicon tandem solar cells, which are a combination of crystalline silicon with a perovskite layer, and have demonstrated record power conversion efficiency of 34% and above. However, there are still issues related to reliability and durability of perovskite as a material of choice for solar PV cells, as well as large scale manufacturing. On the other hand, the potential benefits are highly promising and hence researchers across the world are trying to find solutions to overcome the difficulties – especially the stability and scalability – in commercialising the perovskite technology.

Other emerging trends
Besides the factors described above, there are various other developments taking place in quest of achieving a better RoI in solar power. Some of these are mentioned here in brief:

i. Bifacial solar panels – These, as the name indicates, are solar panels that can capture sunlight from both sides, unlike traditional solar panels that only capture sunlight from one side. With solar PV cells on both sides, the front side absorbs direct sunlight, while the back side captures reflected sunlight from the ground or nearby structures. This design allows bifacial panels to be exposed to more light, which can generate up to 30% more renewable energy than traditional solar panels.

ii. 3D PV leaves – This is a solar panel technology with 3D structure that mimics the leaf of a plant to increase efficiency, by increasing the surface area available for light absorption. The panels are positioned so that the shade from the front layer falls between the rear layer panels when the array moves to track the sun. The 3D structure minimises thermal stress, wind load, and other environmental risk factors.

iii. Floating solar farms – Given the scarcity of land mass to build large solar farms, a floating solar power plant with PV panels mounted on structures that float on bodies of water makes eminent sense. Japan was the pioneer in this when it built the world’s first floating solar farm in 2007. More such floating solar farms have come up since in other parts of the world, e.g., the Canoe Brook floating solar array in New Jersey, USA. The panels are supported by a floating body made of a polymer material, such as high-density polyethylene. Floating solar power plants have several advantages, including:

Floating solar power plants have several advantages. Image credit: NJR Clean Energy Ventures/Business Wire

Breakthrough innovations
There are a number of startups and research initiatives working to raise the efficiency of solar PV cells and panels to make solar power even more affordable in future than what has already been achieved. Here are four of the more promising breakthrough innovations in brief:

Tapping solar power for extremely high temperatures
Very recently researchers at ETH Zurich, a Swiss institution that traces its origins to 1855, and described as a driving force behind Swiss industry, achieved a breakthrough in developing a thermal trap that can absorb concentrated sunlight and deliver heat at over 1,000-degree Celsius. The production of cement, metals and many chemical commodities requires extremely high temperatures of over a thousand degrees Celsius. At present, this heat is usually obtained by combusting fossil fuels: coal or natural gas, which emit large amounts of greenhouse gases. This breakthrough promises a future where such hard-to-abate sectors can be decarbonised with solar power. ETH had earlier in 2019 also demonstrated a novel technology that produces liquid hydrocarbon fuels exclusively from sunlight and air, by developing a solar plant to produce synthetic liquid fuels that release as much CO2 during their combustion as previously extracted from the air for their production. CO2 and water are extracted directly from ambient air and split using solar energy. This process yields syngas, a mixture of hydrogen and carbon monoxide, which is subsequently processed into kerosene, methanol or other hydrocarbons. The next project goal is to scale the technology for industrial implementation and make it economically competitive.



The parabolic reflector at ETH solar plant to produce synthetic liquid fuels. Image credit: ETH Zurich/Alessandro Della Bella

Generating heat and electricity, efficiently
British company Naked Energy’s Virtu is touted as a next generation in solar thermal technology with highly promising results in both heat and electricity generation from solar power. Naked Energy specialises in solar technology and energy conservation and their Virtu technology is a line of solar panels that generate both electricity and heat, and is designed to create more energy per square metre than conventional technology. It provides more energy in less space, and delivers greater returns and at reduced price, regulatory and reputational risk for customers.

Virtu is available in two models of vacuum solar collectors:

Naked Energy recently opened its first stateside project at Creighton University, Omaha, Nebraska, with the project already on track to save 40 metric tonnes of carbon for the institution every year.



Naked Energy’s installation at Creighton University, Nebraska. Image credit: Naked Energy/Business Wire

An academic success
In early August 2024, the Oxford University Physics Department announced their scientists have developed a revolutionary approach which could generate increasing amounts of solar electricity without the need for silicon-based solar panels. This is achieved by coating a new power-generating material onto the surfaces of everyday objects such as rucksacks, cars, and mobile phones. Their new light-absorbing material is, for the first time, thin and flexible enough to apply to the surface of almost any building or common object. Using a pioneering technique developed in Oxford, which stacks multiple light-absorbing layers into one solar cell, they have harnessed a wider range of the light spectrum, allowing more power to be generated from the same amount of sunlight. According to Dr Shuaifeng Hu, Post Doctoral Fellow at Oxford University Physics, their experiments with stacking or multi-junction approach over the previous 5 years have raised power conversion efficiency from around 6% to over 27%, close to the limits of what single-layer photovoltaics can achieve today. What is more exciting is their belief that over time, this approach could enable the photovoltaic devices to achieve far greater efficiencies, exceeding 45%. This is important because it promises more solar power without the need for so many silicon-based panels or specially-built solar farms.

Space-based solar power
Another possible breakthrough waiting in the wings is space-based solar power – building solar farms in space in the geostationary orbit – where there is no limitation like land and sunshines all the time as there is no night or day. Another advantage is sunlight is more than ten times as intense at the top of the atmosphere as it is down at the surface of the Earth. The European Space Agency on its portal also hints at the urgency for new sources of clean and secure energy to aid Europe’s transition to a Net Zero carbon world by 2050. The power generated by solar PV cells in space can be transmitted wirelessly in the form of microwaves at 2.45 GHz to dedicated receiver stations on Earth, called ‘rectennas’, which convert the energy back into electricity and feed it into the local grid. Having said that, this is still in the realm of theory as there are a lot of technicalities involved in this process and it is a matter of ongoing research across space agencies of different countries.



Solar Artist’s impression of a solar power satellite. Image credit/Copyright – European Space Agency

Conclusion
The climate crisis is one of the biggest challenges facing the world today and achieving the Net Zero objective by 2050 is an important step towards that. Solar power has a major role in raising the share of renewables and with new project costs coming down progressively, the goal is not impossible to achieve. This article has examined the positive developments in this direction at some length. A further improvement on the RoI front for solar power would go a long way in making the transition a little less painful.

References
1. https://ember-energy.org/latest-updates/world-passes-30-renewable-electricity-milestone/
2. https://www.industryemea.com/market-overview/80356-advancing-solar-panel-efficiency-%E2%80%93-innovations,-challenges-and-the-way-forward
3. https://www.irena.org/Publications/2023/Aug/Renewable-Power-Generation-Costs-in-2022
4. https://www.businesswire.com/news/home/20230606006050/en/NJR-Clean-Energy-Ventures-and-New-Jersey-American-Water-Highlight-Innovative-Solutions-With-North-America%E2%80%99s-Largest-Floating-Solar-Array
5. https://www.ox.ac.uk/news/2024-08-09-solar-energy-breakthrough-could-reduce-need-solar-farms
6. https://www.esa.int/Enabling_Support/Space_Engineering_Technology/SOLARIS/Space-Based_Solar_Power_overview