Electrification
The Exponential View of Solar Energy
The Exponential View of Solar Energy
The human brain is terrible at comprehending exponential growth.
Much like the power of compound interest is a magical force for investors, it is also possible for innovations and technological breakthroughs to build off each other in the physical world, creating a similar compounding effect.
In this chart, we look at how solar technology has surpassed all expectations from an economics perspective, including those initially set by the International Energy Agency (IEA). Then later, we’ll also look at a new set of predictions for solar energy economics over the next 30 years.
Solar Energy: The Technological Overachiever
Back in 2010, the cost of utility-scale solar power ranged between $0.25-$0.37 per kWh. This meant it was at least three times as expensive as fossil fuels, and that solar was highly cost-inefficient at the time.
Going forward, most organizations projected a linear path for whittling down the cost of solar.
The IEA, for example, forecast that the global cost of solar would drop to roughly $0.22 per kWh by 2020. In reality, however, the price dropped to about one-fifth of that at $0.04 per kWh.
| Year | Actual (BNEF Global) - $ per kWh | 2010 Forecast (IEA) - $ per kWh |
|---|---|---|
| 2010 | $0.28 | $0.36 |
| 2020 | $0.04 | $0.22 |
| Change | -85.7% | -38.9% |
Almost all industry forecasters, including the IEA itself, missed the exponential factors at play.
Wright’s Law
Ramez Naam, the co-chair for energy and the environment at Singularity University, points out in his blog that the exponential decrease in solar costs stem from Wright’s Law:
For most technologies, every doubling of cumulative scale of production will lead to a fixed percentage decline in cost of the technology.
-Wright’s Law
Professor Naam says this occurs through “learning-by-doing”, and more specifically:
- Innovation that improves the technology itself
- Innovation that reduces the amount of labor, time, energy, and materials needed to produce the tech
Put another way, the more solar panels we make and the more we install—the better we get at the whole process over time. And once we’re making thousands or millions of panels, the costs come down exponentially, much like with lithium-ion batteries.
The Future of Solar Costs
Over the years, Naam has taken his own stab at forecasting the cost of solar energy into the future, leveraging the idea of Wright’s Law.
Here’s what he sees coming, based on using a 30% learning rate* for solar:
*The learning rate is the fixed percentage decline that occurs with every doubling of the scale of production.
Based on these projections, even the costliest of solar installations will be more economical than the cheapest of utility-scale fossil fuel plants. This means solar can basically go anywhere, and make sense from a cost perspective.
Underestimate Solar No More?
For fun, here’s a final look at how IEA projections have constantly underestimated solar installations, which are one of the key factors dictating the “learning rate” under Wright’s Law:
With solar energy costs plummeting to record lows and global installations continuing to ramp, it’s possible that solar forecasters may no longer forget about the exponential nature of solar production.
Electrification
Ranked: The Top Lithium-Ion Battery Producing Countries by 2030
Chinese companies are expected to hold nearly 70% of global battery capacity by decade’s end.
Top Lithium-Ion Battery Producers by 2030
Lithium-ion batteries are essential for a clean economy due to their high energy density and efficiency. They power most portable consumer electronics, such as cell phones and laptops, and are used in the majority of today’s electric vehicles.
This graphic uses exclusive data from our partner, Benchmark Mineral Intelligence, to rank the top lithium-ion battery producing countries by their forecasted capacity (measured in gigawatt-hours or GWh) in 2030.
China to Keep Dominance
Chinese companies are expected to account for nearly 70% of global battery capacity by 2030, delivering over 6,200 gigawatt-hours. Chinese giant Contemporary Amperex Technology Co., Limited (CATL) alone is forecasted to produce more than the combined output from Canada, France, Hungary, Germany, and the UK.
| Country | 2030F capacity (GWh) | Top producers |
|---|---|---|
| 🇨🇳 China | 6,268.3 | CATL, BYD, CALB |
| 🇺🇸 U.S. | 1,260.6 | Tesla, LGES, SK On |
| 🇩🇪 Germany | 261.8 | Tesla, Northvolt, VW |
| 🇭🇺 Hungary | 210.1 | CATL, SK On, Samsung |
| 🇨🇦 Canada | 203.8 | Northvolt, LGES, VW |
| 🇫🇷 France | 162.0 | Verkor, Prologium, ACC |
| 🇰🇷 South Korea | 94.5 | LGES, Samsung, SK On |
| 🇬🇧 UK | 66.9 | Envision, Tata |
Currently, China is home to six of the world’s 10 biggest battery makers. China’s battery dominance is driven by its vertical integration across the entire EV supply chain, from mining metals to producing EVs.
By 2030, the U.S. is expected to be second in battery capacity after China, with 1,261 gigawatt-hours, led by LG Energy Solution and Tesla.
In Europe, Germany is forecasted to lead in lithium-ion battery production, with 262 gigawatt-hours, most of it coming from Tesla. The company currently operates its Giga Berlin plant in the country, Tesla’s first manufacturing location in Europe.
Learn More About Batteries From Visual Capitalist
If you enjoyed this post, be sure to check out Charted: Investment Needed to Meet Battery Demand by 2040. This visualization shows the total capital expenditure (capex) requirements to build capacity to meet future battery demand by 2030 and 2040.
Electrification
Visualizing the Growth of Chinese Copper Miners
Chinese miners are set to overtake major producers by 2025.
Visualizing the Growth of Chinese Copper Miners
China, with its huge manufacturing sector, is by far the biggest consumer of copper.
Currently, 70% of copper used in China is imported. As a result, the country has invested heavily in copper mines to secure future supply.
This graphic uses exclusive data from our partner, Benchmark Mineral Intelligence, to compare copper output from the top three global producers with Chinese miners. Since some of the mining operations have shared ownership, this graphic takes into consideration only the portion of production relative to the company’s stake in each mine.
Chinese Miners Set to Overtake Major Producers by 2025
In 2010, Chinese miners produced a total of 1.2 million tonnes of copper. In that same year, the top producer, Chilean state miner Codelco, produced 1.8 million tonnes, while the world’s largest miner and second-largest copper producer, BHP, produced 1 million tonnes.
Over the years, however, Chinese output has surged while major miners have faced challenges. In 2023, Codelco’s production fell to its lowest level in a quarter of a century due to operational problems and project delays.
| Year/millions of tonnes | Zijin | CMOC | MMG | Tongling | Other China | BHP | Freeport | Codelco |
| 2010 | 0.059 | 0.000 | 0.001 | 0.007 | 1.090 | 1.021 | 0.979 | 1.760 |
| 2011 | 0.061 | 0.000 | 0.001 | 0.006 | 0.956 | 0.959 | 0.959 | 1.796 |
| 2012 | 0.082 | 0.000 | 0.046 | 0.007 | 1.070 | 1.070 | 0.975 | 1.805 |
| 2013 | 0.104 | 0.003 | 0.184 | 0.007 | 1.530 | 1.129 | 1.046 | 1.791 |
| 2014 | 0.116 | 0.014 | 0.149 | 0.007 | 1.753 | 1.126 | 1.074 | 1.841 |
| 2015 | 0.126 | 0.040 | 0.199 | 0.007 | 1.810 | 1.085 | 1.230 | 1.891 |
| 2016 | 0.134 | 0.047 | 0.374 | 0.007 | 1.984 | 1.023 | 1.388 | 1.827 |
| 2017 | 0.178 | 0.155 | 0.422 | 0.011 | 1.978 | 0.995 | 1.222 | 1.842 |
| 2018 | 0.212 | 0.127 | 0.383 | 0.019 | 1.967 | 1.161 | 1.239 | 1.807 |
| 2019 | 0.299 | 0.140 | 0.315 | 0.031 | 2.046 | 1.197 | 1.104 | 1.706 |
| 2020 | 0.377 | 0.173 | 0.272 | 0.066 | 2.290 | 1.147 | 1.081 | 1.727 |
| 2021 | 0.518 | 0.192 | 0.235 | 0.093 | 2.378 | 1.068 | 1.328 | 1.728 |
| 2022 | 0.750 | 0.226 | 0.214 | 0.123 | 2.440 | 1.180 | 1.327 | 1.553 |
| 2023F | 0.828 | 0.329 | 0.236 | 0.134 | 2.298 | 1.283 | 1.302 | 1.442 |
| 2024F | 0.886 | 0.460 | 0.301 | 0.121 | 2.421 | 1.423 | 1.421 | 1.414 |
| 2025F | 0.980 | 0.467 | 0.309 | 0.158 | 2.441 | 1.471 | 1.342 | 1.531 |
| 2026F | 1.031 | 0.467 | 0.332 | 0.206 | 2.477 | 1.513 | 1.369 | 1.591 |
| 2027F | 1.036 | 0.568 | 0.332 | 0.255 | 2.467 | 1.383 | 1.345 | 1.600 |
| 2028F | 1.058 | 0.698 | 0.332 | 0.255 | 2.467 | 1.186 | 1.286 | 1.580 |
Meanwhile, China’s biggest copper producer, Zijin Mining, saw its production rise from 0.059 million tonnes in 2010 to 0.8 million tonnes last year.
Combined, Chinese companies produced 3.2 million tonnes of copper in 2023, compared to the combined production of 4 million tonnes by Codelco, Freeport-McMoRan (the biggest copper producer in the U.S.), and BHP.
According to Benchmark Mineral Intelligence data, Chinese miners are forecasted to surpass the three top producers in 2025, with a combined production of 4.4 million tonnes compared to 4.3 million tonnes from Codelco, BHP, and Freeport.
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