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Solar Power Generation

Definition: the generation of electricity based on sunlight

Alternative term: solar energy generation

German: Gewinnung von Solarstrom

Category: article belongs to category methods methods


Cite the article using its DOI: https://doi.org/10.61835/m86

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Summary: This in-depth article explains

  • why solar electricity, generated mainly by photovoltaics, is so important the world's energy future and a prerequisite for a successful phase-out of fossil fuels,
  • what technical devices are used for solar power generation (although details of PV cell are explained in a separate article),
  • how the initial impasse of solar power generation – very high production costs and low demand – was overcome, resulting in the tremendous success of the global photovoltaic industry,
  • how the energy storage challenge will limit further expansion, and what alternative approaches (transmission lines and increased demand flexibility) are helping to mitigate this problem,
  • how serious land use issues and embodied energy issues are.

Solar power generation has become a very important area of photonics, as demand has grown enormously and the technology has made amazing progress over the past few decades. While other encyclopedia articles focus on the technical details of photovoltaic cells and solar panels, here we discuss the more general context.

Need for Solar Electricity

The world's energy needs, and particularly those for electricity as the highest-quality and most versatile form of energy, have increased enormously, and are expected to rise further, even if various options for increasing the efficiency of electricity use are better utilized. Note that a large proportion of mankind is still not supplied with sufficient amounts of electrical energy. Also, further electrification, e.g. of the heat and transport sectors, will be required.

Much of the world's usable energy is still generated using fossil fuels, which has become a huge problem with multiple dimensions:

  • Various pollution problems are a serious challenge, although they can be mitigated with improved technologies. For example, air pollution from the use of fossil fuels has been massively reduced in the United States and Europe, but still causes about half a million additional deaths per year in Europe, according to estimates by the European Environment Agency [1]. In poorer parts of the world, these problems are even more severe. Other serious environmental problems are associated with the production of fossil fuels, be it coal mining, oil drilling or natural gas production.
  • A rapid phase-out of fossil fuels is inevitable to avoid catastrophic global warming [2], following an already increasingly dangerous and costly climate crisis. This phase-out will be neither easy nor cheap, but clearly indispensable to avert an incalculable global multi-crisis with threats such as the degradation or even destruction of vital living conditions, including a catastrophic loss of biodiversity, and unmanageable numbers of people migrating elsewhere after losing any viable living conditions.
  • Dependence on oil and gas states ruled by brutal and corrupt regimes threatens economies and the stability of societies, for example through politically induced shortages and price spikes. In addition, fossil industry interests have corrupted many governments and funded political movements that increasingly threaten to overthrow even well-established, previously stable democracies. Escaping the grip of such influences requires overcoming these dependencies.
  • As fossil resources become increasingly depleted, dependency and pollution problems are growing despite technological improvements. For example, the fracking-based natural gas production now required, possibly combined with energy-intensive long-distance transportation, can easily be more climate-threatening than even coal-fired power, where the previously dominant gas production, e.g. in the Middle East, was comparatively cleaner.

While some still consider these concerns exaggerated, or even absurdly dismiss such warnings while uncritically believing the propaganda of the fossil energy lobby, the warnings are very well founded on a large body of scientific knowledge. (See also the bibliography of this article.) Although partial solutions are available to mitigate at least some of the problems (e.g., reducing air pollution with better technology), the core problems appear to be essentially intractable. In essence, the question of whether fossil fuels need to be phased out is not a matter of opinion, but rather a matter of preferring scientifically based knowledge over propaganda from financially interested parties.

Renewable energy will probably have to play the clear dominant role in providing energy in various forms, since there are hardly any viable alternatives. The use of nuclear energy is severely limited by exploding construction costs, serious safety concerns, including long-term storage of radioactive waste, and the increased risk of nuclear wars through the expanded proliferation of weapons-grade materials. Solar power generation, along with wind power, is an important option with huge global potential due to rapidly falling cost and the absence of various serious issues as those of nuclear power. The most promising technological approach is photovoltaics, i.e. the generation of electricity from sunlight using photovoltaic cells. While an encyclopedia article on this topic explains the working principles of PV cells, different types of cells, and various technological issues, another article explains solar modules containing multiple PV cells. This article focuses on more general aspects.

There are also some ways to generate electricity from sunlight not using photovoltaics; in particular, there are thermal systems, where thermal collectors generate high-temperature heat that is used to generate water vapor that drives a turbine/generator system, similar to a conventional thermal power plant. However, photovoltaics has proven to be by far the most cost effective, and this approach has additional advantages such as no water requirement, very low maintenance, and efficient use of even lower levels of sunlight, e.g. in non-ideal weather conditions.

Note that a large portion of global energy needs concerning other forms of energy, and heat in particular. However, the different sectors will more and more be connected, leading to further electrification. For example, heat pumps will need to provide much of the heat for buildings as only a minor part of fossil fuels for heating could be replaced with renewable resources such as wood. Transport systems can be partly electrified directly, and in the future probably also to some extent indirectly via synthetic fuels made with electricity.

Photovoltaic Systems

Essentially, a photovoltaic power generation system consists of the following:

  • One typically uses multiple solar modules, assembled into an array and mounted on a building or open field, for example. Each solar module contains multiple (typically dozens) of photovoltaic cells optimized for converting broadband sunlight. Common solar modules achieve conversion efficiencies of about 20%, meaning that they can provide about 200 W of electrical power per square meter for lighting at 1 kW/cm2, which roughly corresponds to full daylight conditions and optimal orientation.
  • In most cases, an inverter (DC–AC converter, see below) is required to feed the power into an AC system – typically a local AC grid or, for larger installations, a regional grid operated at a higher voltage level. Modern inverters dissipate only about 2% of the power generated.
  • Less common are off-grid systems that include only photovoltaic generators and usually some batteries that store excess energy for use during periods of insufficient PV generation.
  • Some additional electronic devices (possibly integrated with the inverter) perform auxiliary functions such as monitoring operation, logging operation parameters, notifying an operator in case of problems, and shutting down the system if a serious failure of the system or the grid is detected.

The most popular are small systems with a peak power of several kilowatts, covering a significant part of the annual consumption of a household, or sometimes much more. In most cases, these systems are connected to the local power grid, as stand-alone solutions tend to be much more expensive. Excess power is fed back into the grid to meet local demand at other times.

There are also very small systems, consisting of only one or two solar panels with an integrated converter, which are plugged directly into a household socket to supply a limited amount of power (up to a few hundred watts). In many countries, this approach keeps things simple for consumers, as the electricity generated does not need to be measured and explicitly included in the electricity bill; consumers simply get their bill reduced according to the reduced net energy drawn from the grid. However, such a system can only cover a small portion of a household's annual consumption.

Large solar systems are installed on fields, for example. Here, the investment costs are often more favorable in relation to the amount of energy provided than for small installations, although some land is required specifically for this purpose. They often try to use land that would otherwise be difficult to use. Installations in mountainous areas can be particularly attractive, despite higher installation costs, because the land used is otherwise unproductive and the proportion of winter energy can be quite high.

It is also possible to partially cover land with PV panels so that certain forms of agriculture can be practiced underneath, sometimes even with advantages due to partial shading. Farmers can then generate income by providing both food and energy. They can also meet their own electricity needs, which can be substantial.

Importance of Cell Efficiency

A high conversion efficiency of the photovoltaic modules used is essential as it minimizes the area required to produce a given amount of energy per year. Note that it is not only the area limitations as such that are important (e.g., the cost of land for large-scale installations), but also the amount of additional materials required to mount and protect the cells. This factor has become particularly important as cell manufacturing has become so cheap that other factors have begun to dominate the total cost of photovoltaic installations. Further increases in cell efficiency are becoming relatively more helpful than further reductions in cell manufacturing costs.


Solar cells provide direct current (DC). In order to feed this electrical power into a conventional AC electrical grid, an electronic device called an inverter is required. The basic function of such a DC–AC converter is to feed an AC current into the grid, respecting the given frequency and phase of the grid voltage. Normally, an inverter generates an approximately sinusoidal waveform, which is the best for maintaining high voltage quality and achieving the highest efficiency. In situations where the grid voltage is lost (or voltage parameters are outside certain ranges), the inverter must automatically shut down. Inverters are also increasingly being equipped with additional functions such as reactive power optimization for grid stabilization.

There are also self-commutated inverters that generate the AC voltage for an isolated grid with no other means of power generation. These are less common; most PV systems are connected to a public grid.

The most common are string inverters, which are connected to a string (series) of solar panels, providing a DC voltage of several hundred volts, for example. There are also more powerful central inverters that work with multiple strings. On the other hand, there are microinverters that can be installed in a single solar panel.

Photovoltaic inverters should operate very efficiently over a wide range of available electrical power, depending on lighting conditions. Modern devices can reach about 99% efficiency in a certain power range, although the efficiency can still drop significantly, e.g. when only 10% of the maximum power is available. A European efficiency value is defined as a weighted average for different power levels, and modern devices can still reach over 95% in this respect. Modern power electronics have made it relatively easy to achieve levels of performance that were difficult to achieve at reasonable cost a few decades ago.

Historical Development

Because of the initially very high cost of photovoltaic cells, the technology has been largely limited to specialized, low-volume applications where cost is a minor consideration – most notably powering space satellites. For many years, there was only modest investment in improving PV cells and, in particular, in developing manufacturing methods to achieve lower costs. For the industry, demand was far too low to justify significant investment, and demand remained very low because costs were prohibitive in most cases.

This deadlock was finally broken, in large part, by the political decision in Germany to guarantee a feed-in tariff for solar power through a law known as the Stromeinspeisungsgesetz, starting in 1990. Households could now afford to install a photovoltaic system on their roof with a peak power of a few kilowatts, and feed the excess power into the local grid. In the early years, the energy supplied was remunerated at a level well above the cost of household electricity, so that the expensive installations could be amortized in about 15 or 20 years. Rising demand soon led to falling prices, as industry in several countries was able to invest heavily in improving the technology.

As a result, tariffs could be regularly reduced to keep new installations sufficiently attractive to users. In this way, the number of subsidized installations could grow year after year without causing costs to explode. The resulting reductions in manufacturing costs, especially in China, were much greater than many (including the author of this article) thought realistic in the early years. The success allowed more and more countries to start such programs, and thus photovoltaic power generation became surprisingly cheap. In Germany, between 1990 and 2020, the price of rooftop systems per kilowatt peak (i.e. the full cost of the system) fell to merely 7.4% of the original inflation-adjusted price [3]. The cost of producing electricity per kilowatt-hour (kWh), even for small systems, is now well below the price of electricity to consumers in many countries, and large systems are already competitive with fossil fuel generators in an increasing number of countries.

Although industry pays much less for electricity than residential consumers, the cost of PV generation has become so low that it is undercutting even these lower prices. (The 2021 energy crisis, largely triggered by Russia's war with Ukraine, has pushed even spot market prices in places like Germany above the cost of PV generation). This means that the future strong expansion of photovoltaic power generation will take place even without subsidies and will contribute significantly to stabilizing the economy.

Interestingly, the subsidies required in Germany for this astonishing success were small compared to what Germany has spent over all these decades directly and indirectly subsidizing fossil fuels, especially coal production. It is little known (or at least rarely considered) that in a large number of countries, fossil fuels have received far more government support than renewable energies over many decades.

Since about 2010, the global market share of Asian, and especially Chinese, panel manufacturers has become very high, now exceeding 90%. (China itself has also become the largest user of photovoltaics, with 37% of installed capacity by 2021). On the other hand, the now very cheap solar modules are causing a shrinking part of the total cost of solar power generation equipment, as the cost of mounting the modules and assembling the systems has become relatively more important. For rooftop systems, for example, the module cost is already well below half of the total cost. This also suggests that further dramatic price reductions are unlikely unless cell efficiencies are dramatically improved.

By the beginning of 2023, well over 1100 GW of peak photovoltaic capacity will have been installed, and well over 200 GW more (still growing rapidly) will be installed each year. More than 6% of the world's electricity is already generated by photovoltaics, and this share is expected to grow substantially. The largest contribution comes from numerous small rooftop systems, far more than from large ground-mounted installations. Most new systems are based on monocrystalline silicon cells.

The Energy Storage Challenge

A serious limitation of photovoltaic power generation remains that the power available is limited by the amount of sunlight currently available. As long as solar power provides only a very small fraction of the total power needed in a grid, this is a minor problem; fossil-fueled power plants will simply reduce their output (and fuel consumption) according to the available solar power. In fact, it helps that solar power is most abundant around noon, when demand is high due to electric cooking. However, increasing the share of solar power to the order of 30% or more becomes increasingly difficult as the maximum power generated (slightly less than the sum of the peak powers of all the plants) approaches the maximum power required by the grid. Note that even in this situation (temporary full solar power coverage), the fraction of the total provided electricity remains quite limited due to the lower solar generation at times of less sunlight and during the whole night.

The primarily considered solution to this challenge is energy storage: somehow storing solar energy when its supply exceeds demand and using the stored energy at other times. There are many technological options that are being expanded through ongoing research and development, but they are still limited by factors such as installation costs and energy losses. The opportunities for implementation vary greatly from country to country. Countries with large hydropower storage facilities that have already been created for other reasons are particularly favored. Switzerland, for example, has substantial storage capacity but insufficient winter generation capacity, which increases its dependence on winter electricity imports as demand continues to rise. Large photovoltaic installations are now being planned, some in the mountains, where the proportion of electricity produced in winter can be significant. This additional winter generation can help save water stored in hydroelectric plants, and the short-term fluctuations in availability do not matter much.

Norway has by far the largest hydropower capacity in Europe. The gradual expansion of the capacity of the power lines connecting Norway to central Europe makes it increasingly viable to use these huge storage capacities to expand the use of solar (and wind) power. In essence, they allow countries in Central Europe to export excess power to Norway, which can then store (or even pump up) water, while Norway can return power during periods of insufficient solar power. Although the investment in power lines is substantial, it is quite economical given the great benefits and very long operating life. This approach is much cheaper than building new types of energy storage in Central Europe, especially in regions where the topography makes hydropower storage difficult.

In addition to storage, there are two other strategies for increasing the potential share of solar power:

  • As explained above, transmission capacity can be expanded to allow the immediate use of solar power in a wider area. As another example, the ongoing expansion of the German power grid (with strengthened north-south connections) will allow a significant expansion of wind and solar power in a few years.
  • Another possibility is to create more flexibility in demand. Certain energy-intensive operations could be carried out at times when solar power production is good. One example is future hydrogen production using electrolyzers. (Hydrogen will be needed for many purposes and in large quantities, especially in industry, also for the production of synthetic fuels.) While this approach has an economic caveat due to the still high cost of building electrolyzers, leading to pressure to realize many operating hours per year, this situation is expected to improve with further technological development. The extent to which storage capacity can be replaced by demand flexibility remains to be seen, but there appears to be considerable potential. In the coming decades, this is likely to lead to a situation where a country such as Germany has a combined peak photovoltaic output well in excess of the maximum electricity demand, with a substantial part of the annual production being used for hydrogen production.

Land Use

Because solar energy has a modest power density, much larger areas must be covered with solar panels than with conventional power plants to achieve a given total power or energy output. However, even for a densely populated country, only a very small fraction of the land would need to be covered to meet a large portion of the electricity demand – even with further electrification, e.g., to meet heat demand. Households and small businesses can typically meet a large portion of their electricity needs using only the available roof space that is not otherwise usable. This approach would not work for particularly energy-intensive factories, but this is not to say that such factories only consume a limited proportion of a country's total electricity, and in most countries there are areas elsewhere that offer great potential.

One technology that competes with photovoltaics is the cultivation of biofuels, which are then used to generate electricity or power vehicles. Interestingly, the energy per unit area and year obtained is much lower than that obtained by covering the area with photovoltaics. For example, the possible driving distance from a given area and year can easily be more than two orders of magnitude greater for electric vehicles and photovoltaics compared to diesel engines powered by biofuels. This is mainly because plant growth is far less efficient at capturing energy than photovoltaics. As a result, there would be serious land use problems in trying to replace photovoltaics with bioenergy. (This is a serious challenge for the aviation industry, which is difficult to electrify).

Note also that even in countries with substantial solar energy production, the amount of land used is very small compared to that used for transportation infrastructure, for example.

In summary, while land use is an issue for solar energy in some locations, it is not a fundamental barrier. The far more significant challenge is the energy storage issue discussed above.

Embodied energy and energy payback time

Because solar is a limited power density technology, it requires relatively large installations per amount of electricity generated. In addition to the cost challenge, this raises the question of whether the energy and resources invested in the production of PV systems (not just the PV cells) are worthwhile.

In fact, in the early days of photovoltaics, the energy payback time (EPBT) – defined as the operating time after which the embodied energy required to manufacture and install the PV system is recovered – was around 50 to 10 years. Even compared to the typical long system lifetime (often well over 20 years with moderate maintenance), this was not a satisfactory situation. However, detailed optimization of the technology has led not only to a massive reduction in production costs (see below), but also to a massive reduction in energy consumption. Installations made after 2020 are already achieving energy payback times of around one year, and further progress is expected. Countries such as India and China have already achieved energy payback times well below one year.

Some manufacturers take pride in powering their facilities with green energy, such as large PV arrays on and around their buildings and/or wind power.

Note that embodied energy is not a problem specific to solar PV, but to many other forms of energy. For example, the extraction and transportation of fossil fuels has greater embodied energy and pollution challenges. Examples of particularly problematic cases include the extraction of oil from oil sands in Canada, where a significant portion of the natural resources must be consumed for the extraction itself, and the energy-intensive transport of natural gas in liquefied form.

More to Learn

Encyclopedia articles:


[1]“Harm to human health from air pollution in Europe: burden of disease 2023”, European Environment Agency, published 2023-11-24, https://www.eea.europa.eu/publications/harm-to-human-health-from-air-pollution/
[2]The Intergovernmental Panel on Climate Change, https://www.ipcc.ch/
[3]Simon Philipps and Werner Warmuth, Photovoltaics report from Fraunhofer Institute for Solar Energy Systems (ISE), 2023-02-21, https://www.ise.fraunhofer.de/content/dam/ise/de/documents/publications/studies/Photovoltaics-Report.pdf

(Suggest additional literature!)

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