Wait, what?…Solar is the cheapest energy?

Powering our world with solar energy has been held up as a utopian dream for more than 50 years. “Yes!” agreed most people not associated with the fossil fuel industry, “It would be great to power our world with pure, clean sunshine! If only it were possible!” For decades it was just a fantasy. At the time of the first Earth Day in 1970, photovoltaic panels were so expensive that the power they generated was over $100 per watt. In the mid-1970s, a solar array to meet the needs of a typical home cost a million dollars. In the 70s and 80s, solar energy was limited to spacecraft and low energy applications like calculators and watches.

Well, a funny thing happened on the way to our climate crisis. Solar got cheap. It’s now the cheapest form of energy. It seems that slowly but surely, every year, decade after decade, we’ve achieved improvements in solar technology, materials, and manufacturing processes, driving a steady decline in costs. Today’s home solar panels generate power for $2.00 per watt and at the utility-scale solar costs less than $1.00 per watt.

IEA, Evolution of solar PV module cost by data source, 1970-2020, IEA, Paris https://www.iea.org/data-and-statistics/charts/evolution-of-solar-pv-module-cost-by-data-source-1970-2020, IEA. Licence: CC BY 4.0

These costs continue to drop. Let’s look at this enormous and surprisingly uncelebrated success story more closely:

Solar cell efficiency

First, Solar cells became much more efficient. The “conversion efficiency” measures how much energy from sunlight is converted into electricity output from a panel. In the late 1970s, crystalline silicon cell panels had a conversion efficiency of around 15%. Today, crystalline silicon cell panels are nearly twice as efficient, and the more advanced multijunction cell panels are up to 40% efficient. Several factors affect a cell’s conversion efficiency, including its reflectance , thermodynamic efficiency , charge carrier separation , efficiency, charge carrier collection efficiency, and conduction efficiency values. Improvements have been made to each of these factors.

Component cost reductions

Second, competition and increasing technology maturity have greatly reduced the prices of the systems and packaging that comprise a complete photovoltaic system. We’ve achieved a 4-to-5-fold improvement in the cost for components, including inverters and other electronics, as well as the hardware and packaging required to mount panels.

Manufacturing scale and process Improvements

Third, there has been a 5-fold improvement in manufacturing costs. Primarily this is due to process improvements and economies of scale. Governments around the world provided the incentives (subsidies, tax credits, and feed-in tariffs) that helped us reach the needed economies of scale despite constant resistance from entrenched fossil fuel interests. Read that again! Government policy played a huge and effective role in the miracle of cheap solar!

Labor and installment

Fourth, the labor and processes required to install systems have appreciably improved. Solar panel systems have become more standardized, greatly reducing installation complexity. Advancements such as snap-in and ballasted mounting make installation easier and can eliminate the need for roof penetration. Installers are certified and better trained. Permitting is getting more automated. The solar panel installation industry has reduced the costs of home solar panel use while providing hundreds of thousands of living wage jobs in the U.S. alone. Utility scale systems have similarly benefited from standardization and reduced system complexity.

Total cost of ownership gains

Finally, durability, longevity, and maintainability have improved, further reducing the cost of each kWh a system delivers over its life. The US Energy Administration estimates that the current Levelized Cost of Energy (LCOE) for solar, including storage, is now notably lower than that of even new high efficiency combined-cycle natural gas. And solar will only look better over time if/when the price of gas increases.

The dream of powering our world with sunshine is now a reality. We just need to get busy installing and interconnecting the systems. It is already cheaper (not to mention lower in CO2) to build large solar installations and put solar on the roof of every home than to build more fossil fuel plants. This an extremely important point to consider since the majority of our power generating capacity is over 30 years old and needs to be retired and replaced.

We should also be shouting about this victory from the rooftops. It wasn’t fast or easy, but we’ve proven we can pull off an energy and environmental miracle! And we all understand we will need more such miracles to steer our species and planet clear of the threats from climate change.

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