Just The Facts: The Cost Of Solar Has Fallen More Quickly Than Experts Predicted


To meet ambitious goals to achieve a net zero power sector by 2035, the cost of solar power and energy storage needs to become more affordable. But it has plummeted significantly since its viable inception in the 1970s. The price of residential solar, for example, was at $2.65/W in the first quarter of 2021, down from $7.53/W in 2010; utility-scale solar was $0.89/W compared to $5.66/W a decade ago.

Those plunges were driven in large part by higher module efficiency and lower module cost. The price of different module technologies — including crystalline-silicone, cadmium telluride, and copper indium gallium diselenide — are forecast to lessen in the coming years with more efficient manufacturing.

Few experts anticipated these quickly changing price reductions, however. Most saw the cost of solar as a slow, methodical drop. How did so many fail to see a decade ahead of cost reductions in solar and battery storage installations across utility, commercial, and residential sectors?

The meta-analysis, “Empirically Grounded Technology Forecasts and the Energy Transition,” is a study of more than 2,900 predictions about how long and how quickly the cost of installing solar power would fall from 2010 to 2020. The average prediction was 2.6% annually. Not one single expert in the field envisioned that solar power would fall more than 6%.

And then what happened? Solar power costs fell by 15% per year.

Other technologies have seen similar dips in costs, too. The authors state that “perhaps the most remarkable feature is the dramatic exponential rise in the deployment of solar PV, wind, batteries, and electrolyzers over the last decades as they transitioned from niche applications to mass markets.” By 2019, renewables accounted for 72% of all new capacity additions worldwide.

If these curves hold in the future — and they could well steepen if backed by better policy — then we are, even now, underestimating the possible path of progress.

But Why Was the Transition to US Solar So Slow?

New technology can require decades to pay off, which is an inhibiting factor for companies. As a result, governments often take on the task of early R&D.

Solar got the initial spotlight when Jimmy Carter was elected US President. In 1977, he established the Department of Energy, with a particular focus on energy independence. Yet there was no funding for major federal purchases of solar panels, instead allocating millions of dollars for solar technology R&D. At the time, Carter stated that it was “still too early to concentrate on commercialization of photovoltaics.” Solar panels were mounted on the roof of the White House a year later.

Ronald Reagan, the next US President, hacked renewable energy research budgets by 85%.

Countries like Germany and Japan then left the US way behind in solar power R&D and government subsidies. There was no turning back for Europe and Asia.

The Cost of Solar: A Creep toward Affordability

As the burning of fossil fuels accounts for 87% of the world’s CO2 emissions, a world run on fossil fuels is not sustainable and endangers future generations and the biosphere around us.

The cost of solar PV has decreased by more than 3 orders of magnitude since its first commercial use in 1958. It took solar 6 decades to become more affordable. Just 10 years ago, it was much cheaper to build a new power plant that burns fossil fuels than to build a new solar photovoltaic (PV) or wind plant. Wind was 22%, and solar 223% more expensive than coal.

For more than 4 decades, each doubling of global cumulative solar capacity was associated with the same relative decline in prices. After several decades, though, the costs of solar photovoltaics (PV), wind, and batteries have dropped (roughly) exponentially at a rate near 10% per year.

The provision of energy from solar photovoltaics has, on average, increased at 44% per year for the last 30 years.

The advances that made this price reduction possible span the entire production process of solar modules:

  • larger, more efficient factories are producing the modules
  • R&D efforts have expanded
  • technological advances increase the efficiency of the panels
  • engineering advances improve the production processes of the silicon ingots and wafers
  • the mining and processing of the raw materials extends in scale and becomes cheaper
  • operational experience accumulates
  • the modules are more durable and live longer
  • market competition ensures that profits are low
  • capital costs for the production decline

Solar, Solar Everywhere — Soon

The more comfortable lenders feel about the safety of their investments, the more money will be available to make them a reality. Predictability is the most important benefit of this research. Enter the US solar industry, which grew 43% in 2020. Solar generation rose 23% globally in 2021. Solar continued its strong momentum in 2022, showing 36% year-over-year growth through February when compared to the first two months of 2021.

Now, in June, 2022, progressive US lawmakers are welcoming President Joe Biden’s executive order invoking the Defense Production Act to accelerate domestic solar panel production. Biden is also calling on Congress to pass legislation to facilitate the nation’s transition into a post-fossil fuel era by supporting domestic solar firms as well as other US clean-energy industries. The Defense Production Act (DPA) is the primary source of presidential authority to expedite and expand the supply of materials and services from the US industrial base for national security purposes.

Biden’s plan includes invoking emergency authority to impose a 2-year ban on new tariffs for panels imported from 4 Southeast Asia nations, which has the effect of stabilizing possible retroactive duties which had nearly halted new US solar projects. At soon as the announcements emerged, shares of Sunrun jumped 5.9%, while Enphase Energy surged more than 5.4%. SolarEdge Technology and SunPower gained nearly 3%. Array Technologies popped about 18%, as noted by CNBC.

As reported by Common Dreams, sustained grassroots pressure resulted in the pressure on Biden to act and puts the “full power of federal procurement to work spurring additional domestic solar manufacturing capacity by directing the development of master supply agreements.”

Final Thoughts about the Cost of Solar

The R&D hasn’t stopped with dropping costs of solar. A team of researchers, including from the School of Photovoltaic and Renewable Energy Engineering at UNSW Sydney and the ARC Centre of Excellence in Exciton Science, have made a breakthrough in infrared technology that could lead to the development of solar panels that work at night. Yes, a thermo-radiative diode that converts infrared heat into electricity has produced energy that is incredibly small compared to solar panel output, about 0.001%. But the researchers indicate that the results show hope in developing solar panels that can produce energy at night. For now, the team is looking to do more research and form industry partnerships.

In the meanwhile, solar is becoming a common sight on homes and businesses and along highways. Solar Over Louisville is a noteworthy campaign to push households to adopt solar energy. The region’s Solar Grant program aims to help lower income residents pay for the installation of solar panels, ensuring more equitable access to cleaner energy. The grant program has been so popular that applications are already closed until 2023, indicating big interest in local communities to make the shift to sustainable energy.


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