Q1 2026 Special Section - Earth Based Solar vs Space Based Solar

Mar 30
2 min read

Artificial intelligence is becoming a major driver of electricity demand, with large AI training clusters and hyperscale data centres requiring continuous power. While this has traditionally favoured thermal baseload generation such as nuclear or gas, space-based solar has also emerged as a proposed alternative. We argue that neither may be the most compelling answer. Rapid reductions in energy storage costs are increasingly allowing terrestrial renewables to deliver power with baseload-like characteristics.

We examine how combinations of solar, wind and battery storage can reliably supply constant demand, both for terrestrial data centres and proposed space-based facilities. In high-irradiation regions such as Spain or Texas, solar paired with storage could approach the economics of firm power, with significant implications for gas, wind, nuclear and transmission. Space-based data centres may be credible for specialist edge-compute applications, but today their high costs and complex cooling requirements make them far less viable, with estimated costs around 6–7 times higher than terrestrial alternatives.

What are the enablers of renewables as baseload?

Solar module prices have fallen by roughly 90–95% since 2010, driven by manufacturing scale, technological improvements and rapid expansion of Chinese production, which today accounts for c.85-90% of global solar output. However, solar output is highly seasonal and without a suitable storage solution, most of the output will be curtailed, leading to unintended consequences (electricity shortfalls, grid congestion, electricity prices collapse during solar hours).

Pairing batteries with solar projects would seem the obvious solution. However, until now, high battery prices have disincentivised this option. Continuous learning, cell manufacturing overcapacity, intense competition and technological maturity of Lithium Iron Phosphate (LFP) and other promising alternatives such as Sodium-Iron are driving costs down. BNEF (Bloomberg) expects manufacturing learnings to lead to a further 50% battery pack costs reduction by 2035.

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