Fossil fuels still supply roughly 70% of the world’s total energy, even though solar power is now 41% cheaper than the least expensive fossil fuel option for new electricity generation. The gap between solar’s cost advantage and fossil fuels’ dominance comes down to infrastructure that already exists, industries that need more than electricity, and the simple fact that the sun doesn’t shine around the clock.
Solar Is Cheaper, but Cost Isn’t Everything
New utility-scale solar now generates electricity at about $0.043 per kilowatt-hour globally, compared to $0.073 for coal and $0.085 for natural gas. That price gap has widened dramatically since 2010, when solar was far more expensive than either fossil option. On pure generation cost alone, there’s no contest: solar wins.
But the sticker price of generating a kilowatt-hour doesn’t capture the full cost of relying on solar. You also need batteries to store power for nighttime and cloudy stretches, grid upgrades to handle a decentralized power source, and backup generation for extended periods of low output. Lithium-ion battery systems for commercial use currently run between $164 and $215 per kilowatt-hour depending on how many hours of storage they provide. These costs are falling, but they add a layer of expense that fossil fuel plants, which generate power on demand, simply don’t carry.
The Sun Works Part-Time
The single biggest technical limitation of solar energy is that it only produces power when sunlight hits the panels. Globally, solar photovoltaic systems operate at a capacity factor of about 11%, meaning they generate roughly one-tenth of their theoretical maximum output over the course of a year. Fossil fuel plants, by contrast, run at a global average capacity factor of 46%. That’s not because fossil plants are somehow better technology. It’s because they can burn fuel whenever demand requires it, day or night, rain or shine.
This gap matters enormously for grid reliability. Hospitals, water treatment plants, data centers, and factories all need continuous power. A grid powered largely by solar requires massive storage capacity or backup generators to cover the hours when solar output drops to zero. Fossil fuel plants fill that role today because the storage infrastructure to replace them at scale doesn’t yet exist in most places.
Energy Is More Than Electricity
Electricity generation is only one slice of global energy use. Transportation, heating, and industrial processes consume enormous amounts of energy in the form of liquid fuels, natural gas, and coal burned directly. Oil alone accounts for just under 30% of total global energy demand, and most of that goes into cars, trucks, ships, and planes as liquid fuel, not into power plants.
Heavy industry poses an even harder challenge. Steel production requires temperatures around 3,000°F in blast furnaces. Cement kilns operate at similarly extreme heat to calcine limestone. Aluminum smelting, copper refining, and glass manufacturing all depend on sustained high temperatures that solar panels can’t directly provide. You can use solar electricity to power electric arc furnaces for steel recycling, but primary steel production, cement, and many chemical processes still rely on burning fossil fuels as both a heat source and, in some cases, a chemical input. Solar energy produces electrons, not the intense, continuous thermal energy these industries need.
$7 Trillion in Fossil Fuel Support
Fossil fuels benefit from an enormous financial advantage that doesn’t show up on any utility bill. The International Monetary Fund calculated that global fossil fuel subsidies totaled $7 trillion in 2022, equal to 7.1% of worldwide GDP. That figure includes both direct subsidies (governments keeping fuel prices artificially low) and implicit subsidies (the unpaid costs of air pollution, climate damage, and health impacts). The IMF projects these subsidies will rise to $8.2 trillion by 2030 as fuel consumption grows in emerging economies.
These subsidies make fossil fuels appear cheaper to consumers than they actually are. When governments cap gasoline or natural gas prices, they absorb costs that would otherwise push people and businesses toward alternatives. Removing even a portion of these subsidies would shift the economics further in solar’s favor, but doing so is politically difficult in countries where affordable fuel is tied to social stability.
A Century of Built-In Momentum
The modern economy was physically constructed around fossil fuels over more than 150 years. Pipelines, refineries, tanker fleets, gas stations, power plants, furnaces, and engine designs all represent trillions of dollars in existing infrastructure with decades of useful life remaining. In the United States, the average natural gas main running under city streets is nearly 34 years old, and a quarter of active gas mains have been in service for more than 50 years. A gas pipe in Chicago that was finally retired recently had been operating since 1859.
This creates what energy economists call “carbon lock-in.” A natural gas plant built in 2015 was designed to operate for 30 to 40 years. Shutting it down early means writing off billions in investment. The same logic applies to coal plants across Asia, oil refineries in the Middle East, and gas distribution networks in Europe. Every new piece of fossil infrastructure extends the timeline, because owners and investors expect to recoup their costs over the full lifespan of the asset. Replacing all of this with solar panels, batteries, and new transmission lines is not just an energy project. It’s a complete rebuild of physical systems that took a century to construct.
Solar Is Gaining Ground Fast
Despite all these barriers, the shift is accelerating. Renewables accounted for the largest share of growth in global energy supply in 2024, at 38% of new supply, ahead of natural gas at 28% and coal at 15%. Renewable sources alone now provide 32% of global electricity generation, and combined with nuclear power, low-carbon sources hit 40% of total generation for the first time. Oil’s share of total energy demand dropped below 30% for the first time ever, half a century after peaking at 46%.
The trajectory is clear: solar and other renewables are being installed faster than any new fossil fuel capacity. But the installed base of fossil fuel infrastructure is so vast, and the non-electric uses of fossil energy so deeply embedded in transportation and industry, that the crossover will take decades rather than years. Solar’s dominance in new installations hasn’t yet translated into dominance in total energy use because the existing fossil fuel system is enormous, long-lived, and woven into sectors that electricity alone can’t easily serve.