The rise in solar energy generation is the fastest in the history of electricity, reaching 2,129 TWh (terawatt-hours) in 11 years since taking off and driving 8% of global power generation over the last 12 months, according to Goldman Sachs Research.
Despite reduced policy support for solar, Goldman Sachs Research still expects rapid growth in global solar installations over the next five years.
Source: Ember, Goldman Sachs Global Investment Research
Goldman Sachs Research predicts that solar energy, which has consistently beaten expectations, is likely to meet a high share of the global energy demand over the long run. This is because the three main drivers of the solar energy surge appear structural, not policy driven.
First, learning-by-doing has sharply reduced the cost of solar panels. Goldman Sachs Research estimates that costs tend to drop 20% if cumulative output doubles, with a positive feedback loop from lower costs to higher demand, higher supply, and again lower costs.
In addition, investment costs have fallen faster for solar panels than for any other investment good in modern history, including computers and communication equipment.
Source: Ember, Pinto et al. (2013), Bureau of Economic Analysis, Haver Analytics, Goldman Sachs Global Investment Research
Second, solar has marginal fuel costs of zero. And third, solar panels are modular—they come in small sizes available at constant fixed prices, making it easier to create a decentralized grid.
In contrast, thermal or nuclear power stations are usually large with high fixed costs.
This combination of zero marginal fuel costs, decentralized production, and their favorable potential impact on energy security and carbon emissions likely help explain the solid public support for solar energy.
For the US, surveys were conducted April 28-May 4, 2025. For the UK, the surveys were conducted in April 2025.
Source: Pew Research Center, Climate Barometer Tracker, Goldman Sachs Global Investment Research
Goldman Sachs Research believes any slowing in solar growth is likely to come from reduced policy support and power supply volatility rather than from solar panel supply bottlenecks.
Demand-supply mismatches and reliability issues are two key challenges that the solar surge may pose to the volatility of power supply, power prices, and utilities’ demand for solar installations.
Solar power relies on available sunlight. The inability to turn it on and off can cause significant mismatches between power supply and demand, which can create price volatility. Elevated supply can also lead to solar curtailments for economic reasons when wholesale prices turn negative or for grid-capacity related reasons (like in California).
Negative prices are common during sunlight hours in excess supply markets where not producing is so costly that producers pay consumers to take their electricity. To illustrate, the share of negative hourly wholesale electricity prices in South Australia has jumped from 5% in 2017 to over 25% in 2024. On the flip side, however, prices can jump in periods with limited sunlight but strong demand.
The growth in solar supply also presents reliability challenges, which were underscored by the April 28 blackouts in Spain and Portugal. The fundamental cause was likely the inadequate “synchronous” power generation capacity, which, for now, overlaps with high generation shares of solar and wind power.
To further solar energy growth, Goldman Sachs Research notes two likely requirements: Limiting the occurrence of 1) negative or very low prices (or guaranteeing minimum electricity prices to utilities and 2) excess swings in power frequency through four potential channels.
According to the US Department of Energy, the cost of going solar has gone down every year since 2009—for example, costs for installation, permitting, and inspection as well as the prices of panels. This trend is expected to continue, making solar a potentially attractive proposition for many homeowners.
Be aware, however, homeowner savings are generally limited by rates set by the local utility and if they will pay for any extra energy sent back to the power grid.
While installing solar panels on a house may generate “free” electricity, there are many important upfront costs and factors to consider, including:
For instance, according to Consumer Affairs, a consumer advocacy organization, when looking at the average American home, it will need a 10 kilowatt (kW) system to provide adequate coverage for its power needs. In 2025, that cost is approximately $28,241.
Also, in addition to the solar panels themselves, homeowners should also consider permitting, labor, and equipment costs (e.g., solar batteries, inverters, etc.). Permitting and labor costs may be higher in certain states, like New York and California.
It’s a good idea to check in with your home insurance provider as well to understand how solar installations could impact your premiums or coverages.
Installing solar could mean potential savings over the lifetime of the home. One leading solar energy marketplace estimates the savings to be between $34,000 and $120,000 over the lifetime of an average solar panel system. If the home is located in a place with high electricity pricing, then the savings could be even greater.
Figuring out how much savings will be realized is usually calculated by subtracting the amount you pay for solar from what you would have paid in electric bills over time.
While solar is generally seen to be a positive among appraisers and could increase the value of a home, taking these factors into consideration are important when determining if the investment makes sense.
This article is for informational purposes only and is not a substitute for individualized professional advice. Individuals should consult their own tax advisor for matters specific to their own taxes and nothing communicated to you herein should be considered tax advice. This article was prepared by and approved by Marcus by Goldman Sachs, but does not reflect the institutional opinions of Goldman Sachs Bank USA, Goldman Sachs Group, Inc. or any of their affiliates, subsidiaries or division. Goldman Sachs Bank USA does not provide any financial, economic, legal, accounting, tax or other recommendation in this article. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice. Information contained in this article does not constitute the provision of investment advice by Goldman Sachs Bank USA or any its affiliates. Neither Goldman Sachs Bank USA nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in this document and any liability therefore is expressly disclaimed.
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