The Missing Link: Why Utility-Scale Storage is the Key to 24/7 Solar

Few will have missed the growing importance of renewables in our energy systems. Last year saw a record 585 GW of renewable energy capacity installed worldwide, according to figures from the International Renewable Energy Agency.

A 15% year-on-year growth in renewable installations had delivered a total installed capacity of almost 4.5 terawatts worldwide by the end of 2024, giving renewables a more than 46% share of global electricity generation.

While almost 1.3 TW of this is legacy hydro capacity, variable renewables—namely wind and solar—accounted for a 31% share of total generation, with a year-on-year growth rate of more than 23%.

Wind, with more than 1.3 TW installed globally, now accounts for a quarter of all renewable energy capacity in the world, close to the 29% share for hydro. But the real star of the renewables show is photovoltaic (PV) solar, which accounted for 42% of global renewable generation capacity with almost 1.9 TW installed at the end of 2024.

PV made up three quarters of all new renewable energy commissioned last year, growing 32% year-on-year with 452 GW of capacity additions. More than half of this was in China, which installed 278 GW, with the US (38 GW) and India (25 GW) also installing significant amounts.

There are several factors contributing to PV’s popularity as an energy source. The technology is highly flexible and modular, meaning it can be installed almost anywhere, at any scale. It is easy to install and maintain. And it can deliver immediate benefits, allowing plants to be commissioned almost on a string-by-string basis.

But what really gives PV an edge is its cost. In the latest prestigious levelized cost of energy (LCOE) analysis from financial advisory firm Lazard, published in June 2024, utility-scale PV was beaten only by onshore wind—and only by a tiny margin. US-based PV plants can now achieve an LCOE of just $29 per MWh, Lazard estimates.

This is practically the same as the $27 that can be achieve with onshore wind… and does not reflect the fact that solar plants may be easier to get permits for because they have a lower visual and ecological impact.

The PV cost is also lower than the $30 per MWh that can be achieved with a fully amortized combined-cycle gas turbine, or the $32 level possible with similarly amortised nuclear plants.

Add to this the fact that solar PV is expected to see further cost reductions, and it is clear the technology is set to become the mainstay of future power systems. Indeed, in the International Energy Agency’s landmark scenario for a net zero energy system by 2050, solar makes up more than a quarter of all primary energy in the world.

This is more than any other source of energy and implies solar will be key not only to decarbonizing the electricity system but also to electrifying transport, industry, residential heating and more. Besides being cheap, PV is well suited to this starring role in future energy systems because sunlight is a free and plentiful resource.

Outside the poles, some level of sunlight is guaranteed every day and, since we are diurnal animals, its appearance tends to overlap with periods when humans are most active. This overlap is far from perfect, however. Most obviously, there is no sunlight at night.

And sunshine can be hard to come by on cloudy days and in winter, limiting PV’s ability to support energy systems at these times. Conversely, an abundance of PV can outweigh demand during peak hours of sunshine, leading to the notorious duck curve seen in places such as California.

Because of this, a key feature of future energy systems will be the presence of storage that can capture as much PV power as possible when it is produced, so it can be used when shortages arise.

Already, lithium-ion battery systems are routinely employed to time-shift PV production for durations of up to one or two hours, for example displacing excess midday production to cover early evening demand peaks. Lithium-ion batteries are ideal for this task because, like PV, they have seen major cost reductions over the years.

With continuing cost reduction, the amount of energy that lithium-ion plants can store cost effectively is growing. Pacific Green’s Portland Energy Park in Victoria, Australia, for example, will be able to deliver a gigawatt of electricity continuously for 2.5 hours.

While it remains to be seen, it would not be outlandish to assume that by 2050 the discharge times for lithium-ion battery plants may have grown to as much as six or seven hours, allowing stored solar energy to cover evening and early morning demand peaks. And the energy might not only be used to cover grid demand.

Cheap, abundant solar will also likely power electrified transportation, with electric vehicle batteries contributing to grid stability and nighttime power consumption through vehicle-to-grid technology. Solar could also power space heating and some industrial processes via heat pumps.

Finally, excess PV will likely be used to drive hydrogen production through electrolysis, providing a low-carbon feedstock for industry and a clean fuel source that can be used instead of natural gas to power combined cycle turbines when variable renewable output and battery storage runs out.

This is not the full story for tomorrow’s energy systems, of course. The International Energy Agency’s net zero scenario also foresees having significant levels of dispatchable power in the energy mix, including 18% of biomass (predominantly as a low-carbon transport fuel) and 12% of nuclear (assuming construction rates pick up).

There are also expected to be major advances in energy efficiency, partly because of the electrification of current fossil-fuelled processes that incur heavy thermal losses.

Nevertheless, it is clear batteries will be key to a solar-powered world, with the IEA forecasting that as much as 1.2 TW of utility-scale and behind-the-meter capacity could be installed worldwide by 2030 if society manages to stick to the net zero pathway.

This is a massive leap compared to the 87 GW installed globally in 2023—but the shift to an entirely new energy system demands big changes.