Chasing the Sun: The Next Chapter of Solar Innovation

*This article is adapted from * The Business Times

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It’s no secret that solar energy, once an alternative source of power, is now a mainstream reality. With the costs of PV (photovoltaic) panels decreasing by more than 90 per cent over the last decade, solar energy is one of the cheapest renewable energy sources, second only to offshore wind.

The market continues to surpass forecasts, with estimated solar module installations worldwide anticipated to exceed 4 terawatts (TW) from now till 2030, 67 per cent higher than projections made less than two years ago.

While solar energy accounted for 81 per cent of all new renewable energy capacity added worldwide in 2024, it only contributed 7 per cent of overall electricity generation in the same year.

Panel prices have never been lower, but solar is not just a cost story. We believe the next chapter of solar innovation will look very different from the last one.

Beyond Panels: Rethinking Solar Energy

Over the years, technological innovation has reshaped the solar landscape, particularly in materials science. Silicon-based solar cells, which dominate the market, have a theoretical efficiency cap of around 26 per cent. To push this limit, researchers are developing cells that layer two types of materials - perovskite and silicon - to capture more light spectrum which significantly improves efficiency.

Compound semiconductors like gallium arsenide (GaAs) are also being explored for their ability to absorb sunlight more efficiently and convert it to electricity with less energy loss. Materials like cadmium telluride (CdTe) show promise for thin, low-cost panels for utility-scale deployment, while copper indium gallium selenide (CIGS) enables flexible, lightweight solar cells for niche applications.

PV panels alone are insufficient for generating solar energy and must be supported by a complete system of ancillary components including inverters, transformers, and grid connection infrastructure. In recent years, battery storage has also garnered significant attention from investors.

Since solar energy generation peaks midday while household energy consumption typically ramps up in the evening, excess energy must be stored or it will be wasted, forcing consumers to draw from the main grid during peak hours.

As battery technology improves and costs decline, solar energy is expected to become increasingly accessible to the masses.

Technological innovation is not restricted to hardware alone. Process automation is playing an increasingly critical role, especially in utility-scale PV projects, which account for the majority of new capacity and are expected to reach 61 per cent of total solar deployment by 2030.

Often located in remote areas like deserts or large water bodies, these sites can involve the installation of hundreds of thousands, if not millions, of panels, yet still require substantial on-ground labour for installation, operation, maintenance, and decommissioning.

Companies like Singapore-based deep tech firm Quantified Energy specialise in solar inspection, providing autonomous drone electroluminescence (EL) mapping to help clients around the world detect panel degradation with ultra-precision and at scale.

With a wave of solar panels reaching end-of-life in the coming decade, and with asset owners sometimes choosing to swap out still-functional panels for more efficient or cheaper models, proper disposal is becoming a growing and complex problem.

Solar panel recycling involves uninstallation, transportation, storage, and specialised labour to delaminate panels—a process made more difficult by cost-saving manufacturing practices like gluing glass and silicon layers together.

As of 2021, it is estimated that recycling costs are three times higher than landfill disposal, leading many to opt for dumping panels, raising the risk of heavy metal leaching and environmental damage.

Power to the People: Unlocking Solar Access

Solar generation should not be conflated with power distribution. While utility-scale projects have massive power generation capabilities, the amount of energy transported back to the end user still depends on grid infrastructure capacity and reach, which is often a resource-intensive and political undertaking.

Though utility-scale batteries show promise, distribution challenges remain. As such, centralised solar alone is not enough; a greater push for distributed solar is required, underpinned by creative business models that lower adoption barriers and improve accessibility.

Companies like India-based Metafin combine provision of credit, an established network of local solar installers, and energy monitoring integrations to help rural communities transition from diesel to solar energy while lowering underwriting and operational costs.

Soar equipment leasing and loan companies are gaining momentum across South-east Asia, helping to drive residential solar energy adoption.

While innovation is often equated with technological breakthroughs, the transformation of business models as an equally powerful lever in democratising solar power.

Navigating Uncertainty: Opportunities in Challenges

Recent political developments have injected volatility into the solar sector. Tariff uncertainties and cuts to green energy tax incentives have been blamed for the fluctuations in solar stocks.

That said, solar energy’s long-term fundamentals remain robust. Despite near-term market fluctuations, U.S. electricity demand is projected to rise sharply, driven by AI-fueled data center construction and reindustrialization trends.

With domestic fossil fuel supply chains constrained by turbine shortages, solar energy continues to be a competitive energy source during this transitional period. Bloomberg estimates that over 80 per cent of planned wind and solar projects would still move forward even if tax credits were fully repealed.

It is important to note that the global solar story extends well beyond U.S. borders. The U.S. accounted for just 12 per cent of global installed capacity in 2024 and consumed approximately 15 per cent of global solar energy production in 2022.

Several of the world’s largest solar farms are being built abroad—including Australia’s 6GW SunCable project, China’s 8GW Midong project, and India’s 30GW Khavda hybrid solar-wind project.

Conviction in solar energy has never been stronger across the rest of the world. For example, the Middle East and North Africa (MENA) region aspires to become the global leader in solar energy by 2030 and to achieve solar module self-sufficiency by 2026.

Leading this push is the UAE, which has set a target of 75 per cent renewable energy by 2050 and is home to the 2 gigawatt Al Dhafra mega project.

Despite multiple rounds of tariffs during Trump’s previous administration, demand for solar energy has continued to grow. Still the current wave of policy uncertainty poses real challenges. Within these headwinds lie new areas of opportunity.

Some analysts expect renewed interest in cadmium telluride (CdTe) panels, which are not subject to the same restrictions as their silicon-based counterparts. Similarly, solar financing companies will be pushed to rethink their go-to-market strategies, especially in the distributed residential segment, where fading tax incentives will make customer acquisition more challenging. These shifts may catalyse change across both technology and business models, unlocking new momentum for the sector, even in turbulent times.

Puiyan Leung is partner, investment; Jirapat Suvidejkosol and Isaac Kwa are associates, investment, at Vertex Ventures South-east Asia and India

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