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The basics on the world’s fastest-growing source of renewable energy.

Solar power is already the backbone of the energy transition. But while the basic technology has been around for decades, in more recent years, installations have proceeded at a record pace. In the United States, solar capacity has grown at an average annual rate of 28% over the past decade. Over a longer timeline, the growth is even more extraordinary — from an stalled capacity base of under 1 gigawatt with virtually no utility-scale solar in 2010, to over 60 gigawatts of utility-scale solar in 2020, and almost 175 gigawatts today. Solar is the fastest-growing source of renewable energy in both the U.S. and the world.
There are some drawbacks to solar, of course. The sun, famously, does not always shine, nor does it illuminate all places on Earth to an equal extent. Placing solar where it’s sunniest can sometimes mean more expense and complexity to connect to the grid. But combined with batteries — especially as energy storage systems develop beyond the four hours of storage offered by existing lithium-ion technology — solar power could be the core of a decarbonized grid.
Solar power can be thought of as a kind of cousin of the semiconductors that power all digital technology. As Princeton energy systems professor and Heatmap contributor Jesse Jenkins has explained, certain materials allow for electrons to flow more easily between molecules, carrying an electrical charge. On one end of the spectrum are your classic conductors, like copper, which are used in transmission lines; on the other end are insulators, like rubber, which limit electrical charges.
In between on that spectrum are semiconductors, which require some amount of energy to be used as a conductor. In the computing context these are used to make transistors, and in the energy context they’re used to make — you guessed it — solar panels.
In a solar panel, the semiconductor material absorbs heat and light from the sun, allowing electrons to flow. The best materials for solar panels, explained Jenkins, have just the right properties so that when they absorb light, all of that energy is used to get the electrons flowing and not turned into wasteful heat. Silicon fits the bill.
When you layer silicon with other materials, you can force the electrons to flow in a single direction consistently; add on a conductive material to siphon off those subatomic particles, and voilà, you’ve got direct current. Combine a bunch of these layers, and you’ve got a photovoltaic panel.
Globally, solar generation capacity stood at over 2,100 terawatt-hours in 2024, according to Our World in Data and the Energy Institute, growing by more than a quarter from the previous year. A huge portion of that growth has been in China, which has almost half of the world’s total installed solar capacity. Installations there have grown at around 40% per year in the past decade.
Solar is still a relatively small share of total electricity generation, however, let alone all energy usage, which includes sectors like transportation and industry. Solar is the sixth largest producer of electricity in the world, behind coal, gas, hydropower, nuclear power, and wind. It’s the fourth largest non-carbon-emitting generation source and the third largest renewable power source, after wind and hydropower.
Solar has taken off in the United States, too, where utility-scale installations make up almost 4% of all electricity generated.
While that doesn’t seem like much, overall growth in generation has been tremendous. In 2024, solar hit just over 300 terawatt-hours of generation in the U.S., compared to about 240 terawatt-hours in 2023 and just under 30 in 2014.
Looking forward, there’s even more solar installation planned. Developers plan to add some 63 gigawatts of capacity to the grid this year, following an additional 30 gigawatts in 2024, making up just over half of the total planned capacity additions, according to Energy information Administration.
Solar is cheap compared to other energy sources, and especially other renewable sources. The world has a lot of practice dealing with silicon at industrial scale, and China especially has rapidly advanced manufacturing processes for photovoltaic cells. Once the solar panel is manufactured, it’s relatively simple to install compared to a wind turbine. And compared to a gas- or coal-fired power plant, the fuel is free.
From 1975 to 2022, solar module costs fell from over $100 per watt to below $0.50, according to Our World In Data. From 2012 to 2022 alone, costs fell by about 90%, and have fallen by “around 20% every time the global cumulative capacity doubles,” writes OWID analyst Hannah Ritchie. Much of the decline in cost has been attributed to “Wright’s Law,” which says that unit costs fall as production increases.
While construction costs have flat-lined or slightly increased recently due to supply chain issues and overall inflation, the overall trend is one of cost declines, with solar construction costs declining from around $3,700 per kilowatt-hour in 2013, to around $1,600 in 2023.
There are solar panels at extreme latitudes — Alaska, for instance, has seen solar growth in the past few years. But there are obvious challenges with the low amount of sunlight for large stretches of the year. At higher latitudes, irradiance, a measure of how much power is transmitted from the sun to a specific area, is lower (although that also varies based on climate and elevation). Then there are also more day-to-day issues, such as the effect of snow and ice on panels, which can cause issues in turning sunlight into power (they literally block the panel from the sun). High latitudes can see wild swings in solar generation: In Tromso, in northern Norway, solar generation in summer months can be three times as high as the annual average, with a stretch of literally zero production in December and January.
While many Nordic countries have been leaders in decarbonizing their electricity grids, they tend not to rely on solar in that project. In Sweden, nuclear and hydropower are its largest non-carbon-emitting fuel sources for electricity; in Norway, electricity comes almost exclusively from hydropower.
There has been some kind of policy support for solar power since 1978, when the Energy Tax Act provided tax credits for solar power investment. Since then, the investment tax credit has been the workhorse of American solar policy. The tax credit as it was first established was worth 10% of the system’s upfront cost “for business energy property and equipment using energy resources other than oil or natural gas,” according to the Congressional Research Service.
But above that baseline consistency has been a fair amount of higher-level turmoil, especially recently. The Energy Policy Act of 2005 kicked up the value of that credit to 30% through 2007; Congress kept extending that timeline, with the ITC eventually scheduled to come down to 10% for utility-scale and zero for residential projects by 2024.
Then came the 2022 Inflation Reduction Act, which re-instituted the 30% investment tax credit, with bonuses for domestic manufacturing and installing solar in designated “energy communities,” which were supposed to be areas traditionally economically dependent on fossil fuels. The tax then transitioned into a “technology neutral” investment tax credit that applied across non-carbon-emitting energy sources, including solar, beginning in 2024.
This year, Congress overhauled the tax incentives for solar (and wind) yet again. Under the One Big Beautiful Bill Act, signed in July, solar projects have to start construction by July 2026, or complete construction by the end of 2027 to qualify for the tax credit. The Internal Revenue Service later tightened up its definition of what it means for a project to start construction, emphasizing continuing actual physical construction activities as opposed to upfront expenditures, which could imperil future solar development.
At the same time, the Trump administration is applying a vise to renewables projects on public lands and for which the federal government plays a role in permitting. Renewable industry trade groups have said that the highest levels of the Department of Interior are obstructing permitting for solar projects on public lands, which are now subject to a much closer level of review than non-renewable energy projects.
Massachusetts Institute of Technology Researchers attributed the falling cost of solar this century to “scale economies.” Much of this scale has been achieved in China, which dominates the market for solar panel production, especially for export, even though much of the technology was developed in the United States.
At this point, however, the cost of an actual solar system is increasingly made up of “soft costs” like labor and permitting, at least in the United States. According to data from the National Renewables Energy Laboratory, a utility-scale system costs $1.20 per watt, of which soft costs make up a third, $0.40. Ten years ago, a utility-scale system cost $2.90 per watt, of which soft costs was $1.20, or less than half.
Beyond working to make existing technology even cheaper, there are other materials-based advances that promise higher efficiency for solar panels.
The most prominent is “perovskite,” the name for a group of compounds with similar structures that absorb certain frequencies of light particularly well and, when stacked with silicon, can enable more output for a given amount of solar radiation. Perovskite cells have seen measured efficiencies upwards of 34% when combined with silicon, whereas typical solar cells top out around 20%.
The issue with perovskite is that it’s not particularly durable, partially due to weaker chemical bonds within the layers of the cell. It’s also more expensive than existing solar, although much of that comes down inefficient manufacturing processes. If those problems can be solved, perovskite could promise more output for the same level of soft costs as silicon-based solar panels.
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The storm currently battering Jamaica is the third Category 5 to form in the Atlantic Ocean this year, matching the previous record.
As Hurricane Melissa cuts its slow, deadly path across Jamaica on its way to Cuba, meteorologists have been left to marvel and puzzle over its “rapid intensification” — from around 70 miles per hour winds on Sunday to 185 on Tuesday, from tropical storm to Category 5 hurricane in just a few days, from Category 2 occurring in less than 24 hours.
The storm is “one of the most powerful hurricane landfalls on record in the Atlantic basin,” the National Weather Service said Tuesday afternoon. Though the NWS expected “continued weakening” as the storm crossed Jamaica, “Melissa is expected to reach southeastern Cuba as an extremely dangerous major hurricane, and it will still be a strong hurricane when it moves across the southeastern Bahamas.”
So how did the storm get so strong, so fast? One reason may be the exceptionally warm Caribbean and Atlantic.
“The part of the Atlantic where Hurricane Melissa is churning is like a boiler that has been left on for too long. The ocean waters are around 30 degrees Celsius, 2 to 3 degrees above normal, and the warmth runs deep,” University of Redding research scientist Akshay Deoras said in a public statement. (Those exceedingly warm temperatures are “up to 700 times more likely due to human-caused climate change,” the climate communication group Climate Central said in a press release.)
Based on Intergovernmental Panel on Climate Change reports, the National Oceanic and Atmospheric Administration concluded in 2024 that “tropical cyclone intensities globally are projected to increase” due to anthropogenic climate change, and that “rapid intensification is also projected to increase.”
NOAA also noted that research suggested “an observed increase in the probability of rapid intensification” for tropical cyclones from 1982 to 2017 The review was still circumspect, however, labeling “increased intensities” and “rapid intensification” as “examples of possible emerging human influences.”
What is well known is that hurricanes require warm water to form — at least 80 degrees Fahrenheit, according to NOAA. “As long as the base of this weather system remains over warm water and its top is not sheared apart by high-altitude winds, it will strengthen and grow.”
A 2023 paper by hurricane researcher Andra Garner argued that between 1971 and 2020, rates of intensification of Atlantic tropical storms “have already changed as anthropogenic greenhouse gas emissions have warmed the planet and oceans,” and specifically that the number of these storms that intensify from Category 1 or weaker “into a major hurricane” — as Melissa did so quickly — “has more than doubled in the modern era relative to the historical era.”
“Hurricane Melissa has been astonishing to watch — even as someone who studies how these storms are impacted by a warming climate, and as someone who knows that this kind of dangerous storm is likely to become more common as we warm the planet,” Garner told me by email. She likened the warm ocean waters to “an extra shot of caffeine in your morning coffee — it’s not only enough to get the storm going, it’s an extra boost that can really super-charge the storm.”
This year has been an outlier for the Atlantic with three Category 5 storms, University of Miami senior research associate Brian McNoldy wrote on his blog. “For only the second time in recorded history, an Atlantic season has produced three Category 5 hurricanes,” with wind speeds reaching and exceeding 157 miles per hour, he wrote. “The previous year was 2005. This puts 2025 in an elite class of hurricane seasons. It also means that nearly 7% of all known Category 5 hurricanes have occurred just in this year.” One of those Category 5 storms in 2005 was Hurricane Katrina.
Jamaican emergency response officials said that thousands of people were already in shelters amidst storm surge, flooding, power outages, and landslides. Even as the center of the storm passed over Jamaica Tuesday evening, the National Weather Service warned that “damaging winds, catastrophic flash flooding and life-threatening storm surge continues in Jamaica.”
With Trump turning the might of the federal government against the decarbonization economy, these investors are getting ready to consolidate — and, hopefully, profit.
Since Trump’s inauguration, investors have been quick to remind me that some of the world’s strongest, most resilient companies have emerged from periods of uncertainty, taking shape and cementing their market position amid profound economic upheaval.
On the one hand, this can sound like folks grasping at optimism during a time when Washington is taking a hammer to both clean energy policies and valuable sources of government funding. But on the other hand — well, it’s true. Google emerged from the dot-com crash with its market lead solidified, Airbnb launched amid the global financial crisis, and Sunrun rose to dominance after the first clean tech bubble burst.
The circumstances may change, but behind all of these against-the-odds successes are investors who saw opportunity where others saw risk. In the climate tech landscape of 2025, well-capitalized investors are eyeing some of the more mature sectors being battered by federal policy or market uncertainty — think solar, wind, biogas, and electric transportation — rather than the fresh-faced startups pursuing more cutting edge tech.
“History does not repeat, but it certainly rhymes,” Andrew Beebe, managing director at Obvious Ventures, told me. He was working as the chief commercial officer at the solar company Suntech Power when the first climate tech bubble collapsed in the wake of the 2008 financial crisis. Back then, venture capital and project financing dried up instantly, as banks and investors faced heavy losses from their exposure to risky assets. This time around, “there’s plenty of capital at all stages of venture,” as well as infrastructure investing, he said. That means firms can afford to swoop in to finance or acquire undervalued startups and established companies alike.
“I think you’re gonna see a lot of projects in development change hands,” Beebe told me.
Investors don’t generally publicize when the companies or projects that they’re backing become “distressed assets,” i.e. are in financial trouble, nor do they broadcast when their explicit goal is to turn said projects around. But that’s often what opportunistic investing entails.
“As investors in the energy and infrastructure space — which is inherently in transition — we take it as a very important point of our strategy to be opportunistic,” Giulia Siccardo, a managing director at Quinbrook, told me. (Prior to joining the investment firm, Siccardo was director of the Department of Energy’s Office of Manufacturing & Energy Supply Chains under President Biden.)
Quinbrook sees opportunities in biogas and renewable natural gas, a sector that once enjoyed “very cushioned margins” thanks to investor interest in corporate sustainability, Siccardo told me, but which has lately gone into a “rapid decline.” But she’s also looking at solar and storage, where developers are rushing to build projects before tax credits expire, as well as grid and transmission infrastructure, given the dire need for upgrades and buildout as load growth increases.
As of now, the only investment Quinbrook has explicitly described as opportunistic is its acquisition of a biomethane facility in Junction City, Oregon. When it opened in 2013, the facility used food waste — which otherwise would have emitted methane in a landfill — to produce renewable biogas for clean electricity generation. But after Shell acquired the plant, it switched to converting cow manure and agricultural residue into renewable natural gas for heavy-duty transportation fuels, a process that it’s operated commercially since 2021. Siccardo declined to provide information about the plant’s performance at the time of Quinbrook’s acquisition, though presumably, it has yet to reach its total production capacity of 730,000 million British thermal units per year — enough to supply about 12,000 U.S. households.
The extension of the clean fuel production tax credit, plus the potential for hyperscalers to purchase RNG credits, are still driving demand, however. And that’s increased Siccardo’s confidence in pursuing investments and acquisitions in the space. “That’s a market that, from a policy standpoint, has actually been pretty stable — and you might even say favored — by the One Big Beautiful Bill relative to other technologies,” she explained.
Solar, meanwhile, is still cheap and quick to deploy, with or without the tax credits, Siccardo told me. “If you strip away all subsidies, and are just looking at, what is the technology that’s delivering the lowest cost electron, and which technology has the least supply chain bottlenecks right now in North America —- that drives you to solar and storage,” she said.
Another leading infrastructure investment firm, Generate Capital, is also looking to cash in on the moment. After replacing its CEO and enacting company-wide layoffs, Generate’s head of external affairs, Jonah Goldman, told me that “managers who understand the [climate] space and who can take advantage of the opportunities that are underpriced in this tougher market environment are set up to succeed.”
The firm also sees major opportunities when it comes to good old solar and storage projects. In an open letter, Generate’s new CEO, David Crane, wrote that “for the first time in nearly four decades, the U.S. has an insatiable need for more power: as much as we can produce, as soon as we can, wherever and however we can produce it.”
Crane sees it as the duty of Generate and other investors to use mergers and acquisitions as a tool to help clean tech scale and mature. “If companies across our subsectors were publicly traded, the market itself would act as a centripetal force towards industry consolidation,” he wrote. But because many clean energy companies are privately funded, Crane said “it is up to us, the providers of that private capital, to force industry improvement, through consolidation and otherwise.”
Helping solar companies accelerate their construction timelines to lock in tax credit eligibility has actually become an opportunistic market of its own, Chris Creed, a managing partner at Galvanize Climate Solutions and co-head of its credit division, told me. “Helping those companies that need to start or complete their projects within a predetermined time frame because of changes in the tax credit framework became an investable opportunity for us,” Creed told me. “We have a number of deals in our near term pipeline that basically came about as a result of that.”
Given that some solar companies are bound to fare better than others, he agreed that mergers and acquisitions were likely — among competitors as well as involving companies working in different stages of a supply chain. “It wouldn’t shock me if you saw some horizontal consolidation or some vertical integration,” Creed told me.
Consolidation can only go so far, though. So while investors seem to agree that solar, storage, and even the administration’s nemesis — wind — are positioned for a long and fruitful future, when it comes to more emergent technologies, not all will survive the headwinds. Beebe thinks there’s been “irrational exuberance” around both green hydrogen and direct air capture, for example, and that seasoned investors will give those spaces a pass.
Electric mobility — e.g. EVs, electric planes, and even electrified shipping — and grid scalability — which includes upgrades to make the grid more efficient, flexible, and optimized — are two sectors that Beebe is betting will survive the turmoil.
But for all investors that have the capability to do so, for now, “the easy bet is just to move your money outside the U.S.” Beebe told me.
We might be starting to see just that. Quinbrook also invests in the U.K. and Australia, and just announced its first Canadian investment last week. It acquired an ownership stake in Elemental Clean Fuels, an energy developer making renewable fuels such as RNG, low-carbon methanol, and — yes — clean hydrogen.
Last week, Generate announced that it had closed $43 million in funding from the Canadian company Fiera Infrastructure Private Debt for its North American portfolio of anaerobic digestion projects, which produce renewable natural gas — Generate’s first cross-currency, cross-border deal.
Creed still has confidence in the U.S. market, however, telling me he’s “very bullish on American innovation.” He certainly acknowledges that it’s a tough time out there for any investor deciding where to park their money, but thinks that ultimately, “that volatility should manifest itself as excess returns to investors who are able to figure out their investment strategy and deploy in this environment.”
Exactly what firms will manage this remains an open question, and the opportunities may be short-lived — but it’s a race that plenty of investors are getting in on.
“I mean, God bless the Europeans for caring about climate.”
Bill Gates, the billionaire co-founder of Microsoft and one of the world’s most important funders of climate-related causes, has a new message: Lighten up on the “doomsday.”
In a new memo, called “Three tough truths about climate,” Gates calls for a “strategic pivot.” Climate-concerned philanthropy should focus on global health and poverty, he says, which will still cause more human suffering than global warming.
“I’m not saying we should ignore temperature-related deaths because diseases are a bigger problem,” he writes. “What I am saying is that we should deal with disease and extreme weather in proportion to the suffering they cause, and that we should go after the underlying conditions that leave people vulnerable to them. While we need to limit the number of extremely hot and cold days, we also need to make sure that fewer people live in poverty and poor health so that extreme weather isn’t such a threat to them.”
This new focus didn’t come with a change in funding priorities — but that’s partly because some big shake-ups have already happened. In February, Heatmap reported that Breakthrough Energy, Gates’ climate-focused funding group, had slashed its grant-making budget. Gates later closed Breakthrough’s policy and advocacy office altogether.
Despite eliminating those financial commitments, he still dwells on two of his longtime obsessions in the new memo: cutting the “green premium” for energy technologies, meaning the delta between the cost of carbon-emitting and clean energy technologies, and improving the measurement of how spending can do the most for human welfare. The same topics dominated his thinking when I last spoke to the billionaire at the 2023 United Nations climate conference in Dubai.
What seems to have shifted, instead, is the global political environment. The Trump administration and Elon Musk gutted the federal government’s spending on global public health causes, such as vaccines and malaria prevention. European countries have also cut back their global aid spending, although not as dramatically as the U.S.
Gates seemingly now feels called to their defense: “Vaccines are the undisputed champion of lives saved per dollar spent,” he writes, praising the vaccine alliance Gavi in particular. “Energy innovation is a good buy not because it saves lives now, but because it will provide cheap clean energy and eventually lower emissions, which will have large benefits for human welfare in the future.”
Last week, Gates shared his thinking about climate change at a roundtable with a handful of reporters. He was, as always, engaging. I’ve shared some of his new takes on climate policy below. His quotes have been edited for clarity.
The environment we’re in today, the policies for climate change are less accommodating. It’s hard to name a country where you’d say, Oh, the climate policies are more accommodating today than they have been in the past.
The thesis I had was that middle income countries — who were already, at that time, the majority of all emissions — would never pay a premium for greenness. And so you could say, well, maybe the rich countries should subsidize that. But you know, the amounts involved would get you up to, like, 4% of rich country budgets would have to be transferred to do that. And we’re at 1% and going down. And there are some other worthy things that that money goes for, other than subsidizing positive green premium type approaches. So the thesis in the book [How to Avoid a Climate Disaster, published in 2021] is we had to innovate our way to negative green premiums for the middle income countries.
Climate [change] is an evil thing in that it’s caused by rich countries and high middle-income countries and the primary burden [falls on poor countries]. When I looked into climate activists, I said, Well, this is incredible. They care about poor countries so much. That’s wonderful, that they feel guilty about it. But in fact, a lot of climate activists, they have such an extreme view of what’s going to happen in rich countries — their climate activism is not because they care about poor farmers and Africa, it’s because they have some purported view that, like, New York City, can’t deal with the flooding or the heat.
The other challenge we have in the climate movement is in order to have some degree of accountability, it was very focused on short-term goals and per-country reports. And the per-country reporting thing is, in a way, a good thing, because a country — certainly when it comes to deforestation or what it’s doing on its electric grid, there is sovereign accountability for what’s being done. But I mean, the way everybody makes steel is the same. The way everybody makes the cement, it’s the same. The way we make fertilizer, it’s all the same. And so there can’t be some wonderful surprise, where some country comes in and, you know, gives you this little number [for its Paris Agreement goals], and you go, Wow, good! You’re so tough, you’re so good, you’re so amazing. Because other than deforestation and your particular electric grid, these are all global things.
If you’re a rich country, the costs of adaptation are just one of many, many things that are not gigantic, huge percentages of GDP — you know, rebuilding L.A. so that it’s like the Getty Museum, in terms of there’s no brush that can catch on fire, there’s no roof that can catch on fire, adds about 10% cost to the rebuild. It’s not like, Oh my god, we can’t live in LA. There’s no apocalyptic story for rich countries. [Climate adaptation] is one of many things that you should pay attention to, like, Does your health system work? Does your education system work? Does your political system work? There are a variety of things that are also quite important.
The place where it gets really tough is in these poor countries. But you know, what is the greatest tool for climate adaptation? Getting rich — growing your economy is the biggest single thing, living in conditions where you don’t face big climate problems. So when you say to an African country, Hey, you have a natural gas deposit, and we’re going to try to block you from getting financing for using that natural gas deposit … It probably won’t work, because there’s a lot of money in the world. It’s not clear how you’d achieve that. And it’s also in terms of the warming effect of that natural gas, versus the improvement of the conditions of the people in that country — it’s not even a close thing.
People in the [climate] movement, we do have to say to ourselves, For the Europeans, how much were they willing to pay in order to support climate? — and did we overestimate in terms of forcing them to switch to electric cars, to buy electric heat pumps, to have their price of electricity be higher? Did we overestimate their willingness to pay with some of those policies? And you do have to be careful because if your climate policies are too aggressive, you will be unelected, and you’ll have a right-wing government that cares not a bit about climate. I mean, God bless the Europeans for caring about climate. You worry they care so much about it that the people you talk to, you won’t be able to meet with them again, because they won’t be in power.