Beyond the Hype: Why Solar Remains the Cheapest and Fastest-Growing Energy Bet for Long-Term Investors

dbarneywalker
Jul 14
3 min read

Despite the recent passing of the "One Big Beautiful Bill Act" in the United States, there is still plenty to be optimistic about with respect to Net Zero and clean energy adoption. Globally, solar power is the fastest-growing power source on the planet because it is the cheapest—a statement backed by robust data from the International Energy Agency (IEA), International Renewable Energy Agency (IRENA), Ember, Lazard, and Bloomberg New Energy Finance (BNEF).

To compare the cost of energy-generating technologies, it can be helpful to examine the levelized cost of energy (LCOE), a comprehensive metric encompassing capital, operations, fuel, and maintenance over a project's lifetime. Utility-scale solar photovoltaic (PV) systems currently achieve an unsubsidized LCOE of $20–$30 per megawatt-hour (MWh) in high-sunlight regions, with averages ranging from $29–$92/MWh. This positions solar ahead of onshore wind ($25–$40/MWh), natural gas combined cycle ($40–$70/MWh), coal ($60–$140/MWh), and nuclear ($120–$180/MWh). These figures reflect an over 80% drop in panel costs over the past decade, fueled by manufacturing efficiencies and material innovations like reduced silicon usage.

Lazard's 2025 LCOE analysis underscores renewables' dominance for new-build capacity, particularly when factoring in carbon pricing at $40–$60 per ton. In markets covering 82% of global electricity generation, solar outcompetes fossil fuels without subsidies. Projections indicate a further 2% decline in solar's LCOE this year, accelerating its edge. Yet, intermittency requires storage integration, raising costs to $71–$164/MWh—still competitive for reliable dispatch. In less sunny areas, wind may prevail, but solar's advantages shine in regions like the Middle East or Southwest U.S.

Energy commentator Jesse Peltan notes that modern panels use one-eighth the silicon per watt compared to 20 years ago, enabling cost-effective deployment even with curtailment. Distributed solar paired with storage avoids hefty transmission upgrades, which now account for half of electricity bills. For data centers and high-demand sectors, solar offsets loads efficiently, making it "cheaper, faster, and more resilient."

On the growth front, solar has claimed the title of fastest-expanding power source for two decades running. In 2024, global capacity jumped 32–33% with 597 GW added, representing over 75% of new renewables and pushing generation up 29–30% to exceed 2,000 terawatt-hours (TWh). This outpaced wind (7–16% growth) and fossils, with U.S. solar alone adding 50 GW—a 33% year-over-year increase. Renewables expanded 15.1% overall, but solar drove 80% of that momentum. Over the past decade, U.S. solar has grown 7.8-fold, filling demand gaps as coal fell 3.3%.

Policies like the U.S. Inflation Reduction Act, alongside tech advances, added a tailwind to this surge. Global energy needs rose 2.2% in 2024, met largely by clean sources. Forecasts suggest 16–33% annual growth, potentially reaching 1 TW/year by 2030. Solar's current 5.5% global share highlights its focus on additions, not yet total dominance, amid intermittency challenges. Natural gas grew modestly at 2.7%, underscoring solar's unmatched pace.

In contrast to the U.S.'s retrenchment on renewables and the current politicization of sustainable investing, China's 2023–2024 solar output grew +250 TWh, surpassing nuclear's 1985 global peak of +234 TWh. May 2025 saw China install 93 GW, equivalent to a gigawatt-scale nuclear plant every 1.5 days after capacity adjustments.

Big picture, solar not only provides energy security and ultra-low emissions, but it is also the cheapest. It really is that simple. Countries, corporations, and investors who recognize and lead on solar adoption are going to come out as winners over the long term.

Bibliography:

[1] Lazard's Levelized Cost of Energy Analysis—Version 18.0 (2025). Available at: https://www.lazard.com/research-insights/levelized-cost-of-energyplus-lcoeplus/

[2] IEA World Energy Outlook 2024. Available at: https://www.iea.org/reports/world-energy-outlook-2024

[3] IRENA Renewable Power Generation Costs in 2023. Available at: https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2024/Sep/IRENA_Renewable_power_generation_costs_in_2023.pdf

[4] Ember Global Electricity Review 2025. Available at: https://ember-energy.org/latest-insights/global-electricity-review-2025/

[5] BloombergNEF New Energy Outlook 2025. Available at: https://about.bnef.com/insights/clean-energy/new-energy-outlook/

[6] Various posts by Jesse Peltan on X (2024-2025). Profile available at: https://x.com/JessePeltan