The energy transition is not merely a matter of emissions reduction; it is also about costs.
In the era of renewable energy, low latitudes become competitive. The so-called Sunbelt encompasses Southern Europe, North Africa, the Middle East, India, Australia, the southern United States, and large areas of sub-Saharan Africa. These regions receive between 2,500 and 3,500 hours of sunlight annually, while many parts of Northern Europe receive only about 1,000 hours. Although the price of solar panels is similar globally, the output can differ significantly, sometimes by a factor of two.
The key to solar energy lies in capacity factors. The same equipment in India or North Africa generates far more output than in the UK or Germany. Over the past decade, the cost of photovoltaics has fallen by more than 80%. As equipment becomes cheaper, geographical advantages become apparent. If electricity prices can be kept between €20 and €30 per megawatt-hour in the long term, energy-intensive industries will naturally relocate. Sectors such as aluminum, steel, hydrogen, and data centers will not cling to high electricity prices.
A turning point emerges here.
In the era of fossil fuels, resources were concentrated in a few exporting countries. Solar energy, however, is widely distributed and tends to favor low latitudes. Many developing economies, previously constrained by energy shortages, now have the opportunity to turn the tide. India already has a manufacturing base and a large market. If coupled with stable and inexpensive green electricity, its attractiveness will increase further. Sub-Saharan Africa has long struggled with power shortages, but if photovoltaics and energy storage are deployed effectively, the threshold for industrialization will lower.
The global factory may not always be in East Asia.
Low electricity prices are the most compelling incentive. Capital will take notice. As energy costs comprise a higher proportion of total costs, geographical advantages become more pronounced. If Sunbelt countries can ensure the stability of their electricity supply and transparency in their systems, they could very well attract a new wave of industrial migration.
As for Europe, the issue is more straightforward. Rather than forcing photovoltaics in areas with insufficient sunlight, it would be better to first unlock the potential of Southern Europe. There remains significant solar capacity in Spain, Portugal, Southern Italy, and Greece. Strengthening cross-border electricity grids to transmit excess power from the south to Central and Northern Europe is a pragmatic choice. Although the cost of high-voltage direct current transmission is not low, transmission losses are manageable, making it a one-time infrastructure investment.
As demand continues to rise, collaboration with North Africa can be considered based on circumstances. The Mediterranean is not far away. While political risks exist, energy diversification itself is a method of hedging against risks.
Energy has never been purely a technical issue; it is a combination of geography and systems.
The sun will not move, but industries will.
In the past, those who controlled oil wells held the advantage. In the future, those who harness sunlight will gain the upper hand. The question is not whether the sun is fair, but whether countries understand how to move towards it.
