Mr Howard made the comment after his government announced today two energy projects in Victoria, including a solar concentrator, to cut greenhouse gas emissions.
"The problem with solar power is all the information I've seen is that, like wind power, it is not, in the Australian context, going to make a big contribution to the general of base load power," he told reporters in Nadi.
"Base load power is only going to be generated using fossil fuel or, in the long run, nuclear (power).
"While I see solar as being part of the solution, it's a solution at the periphery rather than at the centre."
Mr Howard said nuclear power came into the equation because of the cost of cleaning up the "dirty coal" which is now used for power generation.
While he was happy to support solar energy development, the prime minister said people had to be realistic about its limitations.
Treasurer Peter Costello today said ensuring the energy sector was environmentally sustainable in the longer term was a key factor in the government's climate change strategy.