Lateral photovoltaic effect has been utilised as an important method for position-sensing applications, including angular displacement monitoring, structural health monitoring and self-power sensors. When a non-uniform light source shines on a semiconductor junction, electron-hole pairs are excited and separated by the built-in voltage across the junction, and a lateral photovoltage is generated between the illuminated and dark areas. To enhance the lateral photovoltage and improve the position-sensing capability, many materials and techniques have been explored to form high-quality heterojunctions. Silicon carbide (SiC) is an excellent material that has attracted a great deal of attention from researchers and industry owing to its superior mechanical, electrical, and thermal properties, and chemical inertness. Notably, among different polytypes, cubic silicon carbide (3C-SiC) has the greatest potential for developing commercial devices because it can be grown directly on the widely available silicon wafers at a low cost. This research investigated the lateral photovoltaic effect in 3C-SiC/Si heterojunctions and explored its potential for developing optical sensors. First, the lateral photovoltaic effect was investigated in an n-3C-SiC/p-Si heterojunction, and its potential for position-sensing applications was examined. In addition, different electrode configurations, such as different electrode sizes and spacings, were evaluated to optimise the design for large lateral photovoltage and highly sensitive sensors. The influence of the SiC layer thickness on the lateral photovoltaic effect was also examined. Next, the behaviour of the lateral photovoltaic effect under external voltage bias was explored. Finally, a freestanding serpentine SiC beam structure was proposed to significantly enhance the lateral photovoltage. The results of this study indicate that 3C-SiC/Si heterojunctions can generate large lateral photovoltage, enabling ultra-sensitive and self-power optical sensors for applications in harsh environments.