From cost to value: How solar’s rapid rise is redefining the grid

In India, Kailash Chandra Pandey speaks in a personal capacity about solar’s rise which has seen decades of system development condensed into a few short years. “We’re talking about adding 24/7 solar and storage onto a grid that wasn’t designed for this level of variability,” he says. “The technical base is catching up — but we’re still in a race.”

Juan Rivier Abbad offers the European perspective. “The [solar development] market has moved much faster than the system,” he says. “In Spain, for instance, almost everything built in the past few years has been merchant-based — no auctions, no subsidies. And we’ve reached a saturation point. The system can’t absorb more [solar] PV unless we change something.”

Europe’s situation isn’t unique. Globally, over 1,600 GW of renewables are stuck in grid connection queues, much of it solar. The core issue: infrastructure hasn’t kept up with deployment.

“In addition, people forget that the low LCOE [levelized cost of electricity] is just one part of the equation,” Rivier says. “You still need to get paid for the power. And that depends on the system’s ability to extract value — through storage, flexibility and, most importantly, demand.”

Solar’s falling cost per kWh has obscured a harder truth: price signals for developers have become more volatile. “We’re already seeing developers who, even with a project fully permitted, hesitate to build because the market price they’d capture is too low,” Rivier says. “It’s not just about energy anymore. It’s about value. And right now, the system is signalling that we don’t need more of the same profile, we need something different.”

The consequences are clear. Developers can no longer optimise for LCOE alone. They must now model for curtailment, volatility, and return on investment in increasingly saturated markets. “The market has matured,” says Parres. “And with that comes the need for more nuanced design.”

To make solar work, storage must scale in parallel. In California, battery storage has become the answer to the state’s infamous “duck curve”. In India, ReNew Power has already deployed 250 MWh battery projects and working on additional 750 MWh projects to meet round-the-clock power obligations. “Storage is now a core design element, not an add-on,” Pandey explains. “We’re not building plants without factoring in batteries — not for utility-scale projects. That’s the only way to meet the reliability requirements being set by tenders.”

With increased efforts towards enhancing grid stability, government guidelines have been issued for using EMS (Energy Management System) developed in India. In fact, some Indian companies already have developed multi-layer EMS and have successfully commissioned the same in India and abroad.

For Parres, batteries are the hardware. The key is how they’re integrated. “Storage only works if you have the right digital layer,” he says. “Grid-forming inverters, smart controls, fast-acting power electronics — these are the technologies that turn a cheap panel and a battery into a grid asset.”

That includes voltage and frequency control, synthetic inertia, and the ability to stabilise increasingly delicate grids. “What used to be done by spinning mass in thermal plants is now done through new technologies like power electronics and smart controls,” Parres adds. “But that means system operators need to understand a new set of tools, trust and support their implementation, and adopt them in their operational practices.”

Perhaps the most overlooked piece of the solar story is the distribution grid — the final stretch between generation and customer. In Europe, where rooftop solar is booming and electrification is expanding rapidly, the pressure is intense.

“Everyone talks about transmission, but it’s distribution where the real bottlenecks are,” says Rivier. “These are fragmented systems, with thousands of small operators, varying rules, and little acceptance for anticipatory investment.”

He argues that distribution grids are still treated as cost centers, not enablers of a flexible, modern energy system. “You can’t electrify transport and heat, bring in rooftop solar and batteries, and still run a system designed for one-way flows where investments in distribution grids are considered as a bad deal for the consumers. We need to rethink the entire planning model.”

“It’s not just electrons we need to move — it’s euros,” Parres says. “Every kilowatt-hour lost to curtailment or volatility is a euro lost by the developer. That’s the frame we bring to system design.”

Distributed solar is often driven by frustration with the grid itself. In Pakistan, rooftop solar has surged due to high energy prices and unreliable power. “People are acting rationally,” says Parres. “They need electricity. The grid doesn’t deliver, so they build their own solution.”

That poses a challenge — and an opportunity. “We must be honest,” Parres adds. “Yes, prosumer growth creates complexity. But it also reflects a real need. If we treat it as a threat, we miss the point.”

Rivier agrees but adds a caveat. “Prosumers must be full participants in the system, not just beneficiaries. That means adapting their homes to use more of what they generate, investing in storage, and recognising that the grid still needs to be paid for. If they want to be real actors in the energy transition, they need to take full responsibility.”

The real danger, Rivier warns, is regulatory overreaction. “Every time the rules change unexpectedly, especially around returns, it unsettles the power purchase agreement (PPA) market. Investors need confidence. And confidence depends on policy consistency.”

The consensus among developers and operators is that future solar projects will be judged not just by generation, but by how well they fit into a broader system. That system must include long-duration storage, high-voltage transmission, smart distribution, flexible demand, and clear price signals.

“Electrification is essential,” Rivier says. “We can’t meet our 2030 targets with today’s 25% electric share of final energy. The whole economy has to shift. And for that, we need grids — not just wires, but real planning.”

He singles out one short-term fix: removing unnecessary taxes and levies from electricity bills. “In many European countries, nearly half the electricity bill is unrelated to the energy itself. That distorts everything — from heat pumps to EVs.”

Rivier also stresses that policy must better recognise the value of storage, whether in the form of batteries or industrial heat. “There’s a mismatch between the value storage brings to the system and the compensation it gets from the market. That needs fixing.” 

Rivier’s final point is clear: markets matter. “Energy systems are incredibly complex,” he says. “You’ve got people trading energy in real time, balancing costs and contracts signed a decade ago. That only works if the rules are stable.”

He warns that recent interventions in Europe have shaken investor confidence. “If you change the rules halfway through a PPA, why would anyone sign a long-term deal again? That kind of uncertainty kills progress.”

Instead, Rivier calls for markets that reward what the system needs — flexibility, resilience, and value. “We can’t keep measuring success just by how much solar we’ve installed. It has to be about how much value that energy brings — to the grid, to the consumer, to the climate.” “And to make this work”, Parres underlined, “we need advanced digital market monitoring and trading tools.”

Solar may have won on cost. Now it must win on integration.

As grids strain under new demands, and markets stretch to reflect true system value, the energy transition faces its next test. That test will be met not by panels alone, but by systems thinking, and the willingness to reimagine how grids, storage, regulation, and business models fit together.

“This is not the end of the story,” says Parres. “It’s just the end of the easy part. The next frontier is upon us, and it’s up to us to shape it.”