Solar Progress
Monday 9 June 2025
Global solar is currently enjoying a growth acceleration as cost declines press onward, and adoption itself achieves real momentum. There are network effects in the spread of technology and solar is no different. Countries and regions that embark on solar deployment soon discover that supply chains and demand converge nicely with each other, likely exerting downward pressure on the cost of adding the marginal GW of new solar capacity. Growth begets growth. The distribution of new solar serves to enhance the future spread of solar. As a result, we have now crossed a new high watermark here in 2025, as solar provided roughly 10% of global electricity in the month of April, according to Ember’s recently updated data tool.
While trends cannot generally be built on the back of a single month’s data, the forward march of solar is relentless enough to allow us to treat a single month as a good and solid signal for what’s to come. Solar share of global electricity already reached 5.6% in 2023, will likely hit 6.3% as of last year, 2024, and is surely on its way above 7.0% in 2025. As always, variations in total global power demand growth itself will largely determine solar’s ultimate share, each year. The denominator of global power, not the numerator of global solar, is in control as it represents a vast foundation of incumbent, economically viable fossil-fuel power capacity.
To wrest control back from the denominator, global solar needs to cross an important line of demarcation: going beyond the task of meeting annual marginal growth, and crossing into annual surplus. The idea that we should try building excess solar is not a new one. While doing so would not immediately make existing, fossil-fuel power capacity uneconomic, flooding countries and regions with excess solar would eventually depress power prices, and likely take out at a tranche or two of incumbent power. This potential would be further supported by the falling cost of storage, which of course is the key component for making solar function more like “baseload” power.
One avenue through which solar can start making some progress into surplus is through the rooftop channel, both domestic and commercial. When households and corporations add rooftop solar, no analysis of total system demand is being made. Rather, these are decisions made for the sake of their own finances. Developers of utility-scale solar, on the other hand, need to line up contracts, which ties the growth of those projects to actual projected demand. This is yet another lens through which to understand that solar (and wind power) will continue to dominate marginal power system growth, but will struggle to cut into the fossil-fuel base. The fossil-fuel base is in a position to let go of system share on its own terms, not the terms set by renewables.
Has China managed to halt growth of fossil-fuel power capacity, having pursued for many years now its titanic buildout of wind and solar? While we cannot know the answer in real time, we do know that this inflection point is inevitable. Let’s pause here to cite some core views of Cold Eye Earth, regarding the current juncture in the energy transition.
• Solar, wind, and storage will come to dominate marginal growth of electricity in nearly every every country, every region. Fossil-fuel power capacity simply cannot compete with this triad for new build. So, prepare for zero growth everywhere for fossil fuels in power.
• Solar, wind, and storage are cheap, but not cheap enough to dislodge incumbent fossil-fuel power at a rate other than a very slow one, at best. The triad just doesn’t have the economic advantage that many assume would render the existing base easily or quickly uneconomic.
• No mysterious law is required to explain how incumbent power is largely protected from renewables, but marginal power growth is dominated by renewables. These dynamics flow directly from the economic terms that currently differentiate the two types of power from each other.
Back to China: it appears that over the past year or so, growth of fossil-fuel power generation in China has skipped along a flat line, even as economic growth was fine. And total emissions have, at least briefly, have also flattened. Now, it must be remembered that the press doesn’t always handle this subject matter well. At The Economist for example, they just couldn’t resist writing the headline “China’s carbon emissions may have just peaked.” Needless to say, this headline has bounced around climate circles for years now, and it’s unhelpful because it taps into the common yet very wrong intuition that once something peaks, it then declines. Readers of Cold Eye Earth are well familiar with that illusion. There is also the sad fact that editors keep falling for this narrative, over and over again. Perhaps The Economist will write this article each year, because it already wrote this same article last year. Ha ha.
While it’s inevitable that emissions from China’s power sector will flatten on a sustained basis (because it’s inevitable that all marginal growth will be covered by low carbon generation) it is equally not inevitable at all that China’s total emissions will either flatten or decline anytime soon. That the power sector alone cannot control the outcome of China’s total emissions output is a standard Jevons dynamic, one that recognizes that as energy becomes more affordable the total economy finds a way to use more of it. China’s renewables revolution in the power sector, for example, may already be leading to lower power prices. This will make its power sector more competitive globally and will add to China’s overall economic growth. That’s a great outcome, but it is likely to add support to the rest of the economy which includes many sectors not currently on course to decarbonize.
And in a twist that is slightly threatening even to power sector decarbonization, the above linked Bloomberg article notes that part of the cost decline in power prices is of coal getting cheaper. Yet another example of the interlocking effects that arise from complex, contingent systems. Wind, solar, and storage eventually lead to cheaper power generation costs. This lowers the overall pricing power across the sector, relaxing demand pressure on natural gas and coal. And, that leads to lower pricing for natural gas and coal, but China has a lot of coal, which can keep pricing lower if necessary while still maintaining its economic viability for coal producers. Again, from the Bloomberg article:
“Generation costs are cracking,” said David Fishman, a Shanghai-based principal at consultancy The Lantau Group. “Coal generators, when they’re bidding into the system, they’re able to entertain lower prices because all of the generation costs are lower.”
Just as economic conditions worsen due to the trade war, Chinese industry is finding relief in the government’s drive for energy security. That effort has been most successful in power markets. The country is sitting on a glut of coal that’s built up over years and leads the world in its rollout of wind and solar.
Now let’s check in with two views of wind and solar in China’s power sector. The first chart simply logs the advance of coal vs. combined wind and solar over the past decade. The portrait here is one of more, more, more. Lots more power coming from wind and solar, but lots more power coming from coal too. China remains the world’s top manufacturer. So its powergrid needs lots of new generation. Wind and solar? Great. But still more coal. Not so great Again, coal will eventually be halted, along with natural gas. But we will only know that in hindsight.
Now let’s move on to the actual wind+solar share of total China power generation. In 2023 (the latest official data) combined wind and solar reached 1470 TWh out of total generation of 9456 TWh. While impressive at a 15.5% share, sources ex-wind+solar (the black bar) continue to grow. That black histogram will eventually flatten out. Indeed, its growth clearly slowed in 2018 - 2022. Yet, in 2023, despite another huge year for wind and solar growth, all other sources bolted higher too.
If it’s easier to build new wind and solar in Texas than it is in New York, well, that’s not exactly an endorsement of the corporate theory of power, is it? This is the challenging retort to an old, cherished framework on the left which appears throughout the new book from Ezra Klein and his co-author Derek Thompson, Abundance. Klein and Thomson correctly point out that in deep blue states and deep blue cities it has become nearly impossible to build bike lanes, bridges, transmission lines, and housing especially. And, when public infrastructure or housing does get built in blue states and blue cities the costs tend to be far higher than in other domains. Ergo, Texas v. New York. To be honest, the title of the book is arguably off-center to the central theme of the book. A title more on point would be Outcomes.
Klein recapped these themes in a long op-ed in this weekend’s New York Times, The Problems Democrats Don’t Like to See:
A recent RAND report compared the costs of producing multifamily housing — both market-rate housing and affordable housing — in California and Texas. Per square foot, it cost 2.3 times as much to build market-rate housing in California as it does in Texas. If what you care about is affordable housing, the gap is even worse: It costs more than four times as much to build a square foot of affordable housing in California as a square foot of market-rate housing in Texas, largely because of the avalanche of everything-bagel requirements that public money triggers.
It also takes, on average, 22 months longer to bring a project to completion in California. I find it implausible to argue that the reason for this disparity is that Texas has solved the problem of corporate power and oligarchic influence and California has not.
As Cold Eye Earth has observed for years, there’s a lot of climate activism which instead of being focused on outcomes is obsessed with the corporate power of oil and gas companies. But oil and gas companies are simply not the lever by which energy transition gets started, and proceeds. Klein and Thompson, who are very much on the left, have stirred the pot on the far-left because they’ve correctly described corporate power as a kind of overbroad, almost blob-like theory that inhales every detail of how things get done in a modern economy, and embeds it in its own, rather amorphous shape. No doubt Klein and Thompson are not perfect in their descriptions and prescriptions, but their plea is sorely needed: progress is better served by correctly identifying which levers to pull to actually create the preferred outcomes.
Further reading: Congressman Ritchie Torres spoke to these same issues in a recent podcast with Sam Harris, A Future for Democrats.
—Gregor Macdonald