Solar powers ahead

Solar is reaching record levels in Ireland. In July, it accounted for almost 10 per cent of electricity generation, while installed capacity has now passed 3GW. And with more than 200,000 homes equipped with solar panels, the question is if the grid, storage and infrastructure keep pace with its rapid growth.

Solar is moving firmly into the mainstream because businesses increasingly see it not simply as a sustainability investment, but as a sound commercial decision, says John Reynolds, AIB head of business banking (Dublin and east). “For businesses with suitable premises and strong daytime electricity usage, generating their own electricity can reduce operating costs and exposure to energy price volatility.

“Importantly, the commercial and sustainability arguments are increasingly coming together. SMEs want to play their part in the transition, but understandably investments also need to make financial sense, and solar can be a very practical first step on that journey.”

The growth of solar has been remarkable, says Robert Walsh, director, infrastructure and energy corporate finance, PwC Ireland. “In 2022, solar accounted for less than 1 per cent of the fuel mix. By 2025, that had risen to approximately 4.5 per cent for the year, and summer 2026 saw records broken, with solar meeting around 10 per cent of energy demand in July. These figures likely understate the true picture, as behind-the-meter generation on rooftops and business premises is not captured.

“Solar is also increasingly important for grid stability, providing a balanced generation mix when the wind is not blowing.”

Growth is coming from across the market, which is one of the strengths of solar, explains Ronan Power, chief executive of Solar Ireland, the representative organisation for the solar industry in Ireland. “Ireland needs utility-scale solar, commercial and industrial solar, and household rooftop solar if we are going to capture the full opportunity.”

The cost of solar technology has fallen dramatically as manufacturing has scaled and technology has improved, Power says. KPMG Ireland’s Sunrise report highlighted that the cost of solar PV modules had fallen by approximately 90 per cent since 2000. However, he adds, other project costs, including grid connections and labour, have not fallen at the same rate.

“Solar is also particularly versatile. It can be deployed relatively quickly and at almost every scale, from a family home, farm or factory roof to a utility-scale solar farm. That versatility has allowed several parts of the market to grow at the same time.”

Grid capacity and storage are the most significant constraints, says Walsh. “Beyond those, planning remains overly time-consuming and costly, which deters investment. This is less so than for wind projects, but still material. Another concern is the certainty of grid connections. Grid connections are taking too long, and the timing of connection is far too uncertain.

“These delays cost developers money that cannot be mitigated through other project agreements, undermining confidence in deployment.”

Grid constraints can be an issue for some projects, particularly those seeking to export significant surplus electricity, but they should not automatically discourage businesses from exploring solar, says Reynolds. “The starting point should be understanding the individual business: how much energy it consumes, when it consumes it and what size of solar installation is appropriate. That comes back to a broader point about sustainability investment: rather than simply installing the largest system possible, SMEs should focus first on the solution that best meets the needs of their business.”

Energy-price certainty can be a significant part of the investment decision for businesses thinking about adopting solar, particularly following the volatility businesses have experienced in recent years, says Reynolds. “On-site solar gives a business greater control over part of its energy requirement because electricity generated and consumed on-site reduces the amount that has to be purchased from the grid.

“It is not complete insulation from energy price risk, and businesses will still require grid electricity at certain times, but for the right business the combination of lower energy costs, greater predictability and a reduced carbon footprint can be an attractive proposition.”

The focus now has to shift from setting targets to delivering them, says Power. “First, Ireland needs to accelerate investment in the electricity grid and shorten connection timelines. Second, we need to scale battery storage and flexibility so that renewable electricity can be stored or used when it is most valuable. Third, planning and consenting need to become faster and more predictable, without compromising environmental or community standards.”

Power says there is a need to unlock much more rooftop and on-site generation. “Homes are part of that, but there is enormous potential across factories, warehouses, farms, schools and other public and commercial buildings. And we need regulatory frameworks that reflect the electricity system we are building rather than the one we inherited. That includes enabling shared grid connections, hybrid renewable and storage projects, private wires and more active participation by electricity consumers.”