Solar PV 3.0 – the next wave of innovation in the solar industry

It seems odd to say that solar photovoltaic (PV) technology has come a long way since its use in space exploration in the 1950s - arguably, the first wave of innovation that honed its commercial applications. How much further can we go beyond space?

But this isn't about distance. It's about how the technology moved from the extraordinary to the everyday. Over the subsequent decades, costs plummeted and efficiency improved. Solar PV is now an established source of energy (see Figure 1), powering all sorts of regular activity (as well as continued use in space flight).

Acceptance as a proven technology coupled with governments bolstering their energy security characterize the solar industry's second wave. Global solar PV capacity is forecast to almost triple over the 2022-2027 period, becoming the largest source of power in the world.¹

What is solar PV 3.0?

The next wave of development is known as solar PV 3.0. In this third growth phase, capacity will increase further and power networks will be reconfigured to support renewables. All of which will help companies, governments and investors achieve 2050 net zero carbon goals.

Solutions to scale the technology and address responsible investing concerns will spur growth. But it will need capital, offering a range of opportunities for investors. A few of which are highlighted below.

The potential of solar 3.0 projects

Solving supply intermittency

Renewables cannot deliver a consistent supply of energy because the sun doesn't always shine and the wind doesn't always blow. Battery storage will help overcome this intermittency problem.

Batteries are key to enabling high renewable penetration. Grid-scale battery storage is needed and opportunities are appearing in all parts of the electricity value chain.

Standalone large-scale battery storage, for example, is flourishing. Business models for these projects usually include multiple revenue streams through grid services. According to Bloomberg NEF, the global energy storage market is expected to see an annual global growth rate of 21% by 2030, with much of that growth coming in countries like China and the US.²

Sourcing energy near end users

Distributed solar power generation generates energy near the end users of that power, in contrast to producing energy at a large power plant and distributing it through power grids.

Rooftop solar - solar panels on residential rooftops or on commercial buildings that will be using that energy - is becoming increasingly popular. It's easily available in many countries and surplus power can be sold. These modular, decentralized and flexible systems have many advantages; they are low-cost, reduce transmission and distribution losses, and are easy to install and maintain.

Increasing the efficiency of solar assets

Repowering makes existing solar infrastructure more efficient. We expect it will form a large new sub-sector of the global solar industry. It involves replacing equipment or retrofitting sites with new technology to increase output while extending the lifespan of a solar farm by multiple decades.

Because they can use existing grid connections and transmission infrastructure, repowering projects are often more cost-effective than new-build or greenfield developments. Even well-running projects can benefit from repowering, with new, more efficient technologies likely to increase the value of existing sites.

Fueling alternative energy

Hydrogen fuel will play a crucial role in our journey to net zero, but it must be generated from renewable energy, rather than fossil fuels. Currently almost all hydrogen produced - around 70 million tons annually - is made using fossil fuels.³ However, as the costs of solar energy falls, producing hydrogen using electrolyzers, solar power, and water becomes a viable option.

Nuveen Infrastructure solar PV investment example⁴

Portfolio of solar PV projects across Portugal, Spain and Italy.

• Assets either under development, construction and operation across three countries
• Additional project features include conservation and protection of flora and fauna, community care and special need assistance

Acknowledging the challenges of 3.0

While embracing renewable energy helps solve for climate and decarbonization concerns, investing responsibly remains key. Solar developers, for example, must consider the impact of solar farms on biodiversity and take steps to minimize negative effects on wildlife and habitats. Responsibly sourcing materials along the supply chain is critical as well. But the industry is stepping up, notably in Europe, with charters to improve supply chain due diligence.

Transitioning to a net zero world

Reaching net zero emissions by 2050 will require the public and private sector to invest responsibly and heavily in solar energy between now and 2030. Policymakers are facilitating the transition away from fossil fuels, creating a positive environment for solar PV 3.0. And institutional investors are actively seeking opportunities to deploy capital. We expect the industry's next wave of innovation and development will crystallize solar as a critical solution to decarbonize grids across the globe.

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