Efficiency in Focus: Solar Cell Improvements Will Help Power the Future
Solar energy has become central to our quest for a sustainable society. Advances in solar panel efficiency will propel that quest.
Against all odds, solar power has become one of the cheapest forms of energy generation, even in cloudy countries like the UK.
Its development is so extraordinary that it is on track to revolutionise how we generate, store, and use electricity. Recent years have shown outstanding technological and commercial achievements in solar energy. Central to these is the efficiency of solar modules — the measure of how much sunlight can be converted into usable electricity.
The solar energy industry fully recognises the importance of efficiency. Electricity consumers, however, do not often share this awareness. Here, I explore the intricacies of module efficiency, highlighting how we can better appreciate Solar's potential to reshape the world energy landscape.
Overcoming Scepticism: The Rise of Solar Energy
Solar energy was initially downplayed and almost discarded as a viable solution in the renewable energy shift. Scepticism regarding the role of solar in the electricity sector has historically stemmed from several factors. For a long time, the cost of solar energy was so prohibitively expensive that it made little economic sense. Early solar modules were inefficient and complex, casting doubt on their suitability for broad-scale energy production. The intermittency of sunlight also raised uncertainty. Reduced production during cloudy days and no energy at night presented a challenge with grid integration requiring energy storage. It is no surprise that the International Energy Agency repeatedly underpredicted the deployment of solar, as observed in the figure below.
Over time, however, technological advancements have seen staggering enhancements in efficiency and reductions in the costs of solar modules. Improved energy storage has also been developed and deployed. Today, efficiency, scalability, and integration concerns have been entirely overcome. The advances in manufacturing, economies of scale, and highly efficient solar cells enabled the lowest cost of electricity of any other technology, now below US$ 2c/kWh. The cost of producing solar modules is at a record low, with values as low as US$ 12c/W being recorded in 2023. This dramatic cost reduction has elevated solar energy from a marginal to a mainstream energy source.
The Centrality of Efficiency
Solar modules have efficiencies that sound modest. Ranging between 18 and 23%, the module’s efficiency is in fact crucial. The importance of efficiency is best illustrated when considering the financial benefits of a solar energy installation. I recently analysed this for a UK household. The centrality of efficiency is more exacerbated for large solar farms.
The net present value (NPV) of a solar farm in the UK can vary considerably based on panel efficiency. Higher efficiency leads to more energy production and significant revenues for a constrained solar farm area. A solar asset manager knows this very well.
For example, consider a 100 MW solar power farm in the United Kingdom, where construction costs are ~£40M, and 21% efficient modules are estimated to generate 100 GWh of energy in the first year — a conservative estimate for a suboptimal farm in Oxfordshire. The lifetime is 25 years (again conservative), and they would sell all the electricity at a market rate. For simplicity, I assume a constant rate of 7p/kWh (£70/MWh) for selling the solar electricity.
Using some typical yet modest and pessimistic assumptions (a maintenance cost of £20k/MWp), the net present value of this £40M investment is a whopping £26.5M. This means the solar farm will return its investment in about 12 years and produce an extra 26 million sterling in profit over the subsequent 13 years. I provide plots for some crucial metrics in solar projects below, and my Excel sheet for these calculations here.
Now, let us consider a slight improvement in the solar modules and assume that it does not increase the initial £40M construction and £20k/MWp maintenance costs (this is not necessarily the case as the actual cost structure is a bit more complicated, but let me use it as a quick approximation since only asset managers know the precise cost structure).
At 21.5% efficiency, this same plant now has an NPV of £28.08M for the same area of panels installed.
Yes, as little as a 0.5% efficiency translates into an extra £1.6M in profits, which accounts for over £64,000 extra each year.
In conclusion, efficiency is prime!
The Potential of Higher Solar Module Efficiency
The potential for further improvement in solar modules is substantial. Solar panels use semiconductors, which allow the tuning of charge flow, essential in converting sunlight to electricity. In 2023, the efficiency world record in a solar cell made from a single semiconductor was broken twice. The semiconductor in question is called silicon — the same used for manufacturing microchips.
After a 6-year gap, photovoltaic solar manufacturers have stepped up their efforts to demonstrate yet higher efficiencies. Rising from 26.7% in 2015, silicon solar cells achieved an astonishing 26.81% in mid-2023, and 27.09% by the end of 2023. Such efficiency improvements are very much worth having, as we have seen.
Furthermore, future and more advanced solar cells will include two semiconductors in tandem. These tandem designs also saw significant efficiency improvements in 2023. Although these are not yet ready for large-scale manufacturing, they picture a promising future for solar energy.
In 2023, the record efficiency for a tandem solar cell made in a laboratory using silicon and perovskite semiconductors (the two most promising materials) was broken an astonishing three times.
It rose from 32.5% (HZB) in 2022 to 33.2% (KAUST) in early 2023, to 33.7% (KAUST), and finally 33.8% (LONGi Solar). The plot below shows how relentless advances and developments in solar technology have been.
Such advancements underline the extensive research and innovation in the field, as evidenced by a substantial increase in scientific publications on silicon-based solar cells. Springer Nature, one of the most prestigious and highly cited publishing houses, ran only 2 articles relating to silicon solar cell technology in 2018. This compares starkly to the 16 articles they ran in 2023. (data from www.webofscience.com)
Producing a nearly perfect solar cell is difficult. But making millions of cells in a production line at high throughput and keeping such ultrahigh efficiencies is an extraordinarily complex feat. Today, solar manufacturers produce an estimated 400 GW of solar modules per year — about 800 million modules, each having 60–90 solar cells.
Even so, industry titans are pushing the limits. They have committed to improving the efficiency of modules by around 0.5% each year, as illustrated in the figure below. New technological advancements saw industrially produced cells in 2023 reach efficiencies of 26–26.5% [1,2,3,4]. These would allow commercially available solar modules to be as high as 25% efficient — assembling solar cells into modules always leads to a loss in efficiency.
Despite the complexity of mass production, manufacturers continue to aim for yearly efficiency improvements, signalling a promising future for solar energy technology.
Efficiency and CO2 Emission Reduction
The efficiency of solar panels is also critical for reducing CO2 emissions. Higher-efficiency panels generate more electricity from the same amount of sunlight, displacing the need for fossil fuels and leading to more significant CO2 savings. As solar panel efficiency continues to improve, the environmental impact of solar energy becomes increasingly positive.
Displacing fossil fuels in electricity generation is critical. They are the largest sources of CO2 emissions globally. By generating more electricity, efficient solar panels reduce the world’s reliance on fossil fuels.
Solar panels need no fuel. Their CO2 footprint arises primarily from the energy used in manufacturing, with some extra contribution from transportation and installation and, in the future, recycling and waste management. In our current highly carbon-intensive grid, this means substantial emissions. But they more than pay off when considering the energy generated over 25 years.
For example, consider the UK grid with an average CO2 intensity of 250 g CO2 emitted per kWh of electricity produced. The 21% efficient modules in 100 MW solar plant will save an average of 24,200 tons of CO2 emissions each year. This amount increases to 27,660 tons CO2 when the efficiency grows to 24%. This equates to the emissions produced by driving an average petrol-powered passenger car for >67,000,000 miles (each year). So, on top of the financial benefits, solar investments are hugely positive for our environment.
By harnessing solar energy more efficiently, we will reduce carbon emissions, mitigating global warming and climate change. This is vital in the context of international targets for CO2 emissions outlined in the COP meetings, or the IPCC reports.
The Future of Solar Energy
Solar energy is on course to become one of the world’s largest electricity generators. But, like all technologies, it is not without flaws. One of the most publicised weaknesses is the lack of a disposal, recycling and re-utilisation strategy for solar modules. As we have only just begun to scale the technology up, no effort has been made to identify recycling routes. Billions of solar modules will likely come to an end-of-life in the next decade, and we should be thinking about what to do with them. I wrote earlier about this showing it’s not an issue.
Recent reports have raised concerns about the exacerbated use of minerals in sustainability. Most notably, PV modules use significant portions of the world’s supply of silver, silicon, and aluminium. Future technologies also require expensive and rare elements like indium and bismuth, which should be avoided; thus, manufacturing innovations are still critically required. Lastly, copper in electrical cables has been recently highlighted as a mineral crucial to deploying several clean energy technologies.
Finally, fears about supply chain vulnerabilities have also affected the deployment of solar energy. The global supply chain for solar module production is concentrated in the Far East, primarily China. This makes it vulnerable to geopolitical tensions, trade disputes, and other disruptions, as has already been the case in the US. Despite this challenge, significant efforts are being made to resume solar manufacturing in the West, as has been intended via the US’s Inflation Reduction Act and Europe’s Net-Zero Industry Act.
Notwithstanding a pessimistic start, solar energy is now recognised as a significant technology for driving decarbonisation globally. The future of solar energy remains bright, with research and innovation playing a critical role in its growth and in meeting the emission mitigation targets set by governments worldwide. Bolstered by technological advancements and increasing efficiency, solar energy stands at the forefront of the renewable energy revolution.
