Solar energy is one of the most promising sources of renewable power for the future. It is clean, abundant, and increasingly affordable. But how did solar panels become so cheap in the last four decades? What factors contributed to this remarkable drop in cost?
Solar panels, or photovoltaic (PV) modules, are devices that convert sunlight into electricity. They are made of silicon cells that absorb photons and release electrons, creating an electric current.
The Drop in Cost
The first solar cell was invented in 1954 by Bell Labs, but it was too expensive and inefficient for practical use. It cost about $1,900 per watt and had an efficiency of 6%. In the last 40 years, the cost of solar panels have dropped by an almost unimaginable amount. today, a typical solar panel has an efficiency of 20% which is over 3x the efficiency of the first 6 panels, and almost 7x the efficiency of plants. it also costs, on average, 64cents per watt, which is over 2900 times cheaper than it originally was.
How was this achieved? well, there was a recent study by MIT researchers looking into the drastic reduction in costs for solar panels, and this is what they found:
How it Happened
First, there were technological improvements: These include increasing the conversion efficiency of solar cells, reducing the material and energy inputs, improving the manufacturing processes, and developing new materials and designs. This was especially a dominant factor in the earlier years, as there was a rapid increase in the efficiency of the actual solar panels themselves.
Secondly, there were Economics of Scale: These refer to the benefits of producing larger quantities of solar panels, such as lower fixed costs per unit, higher bargaining power with suppliers and customers, and better utilization of resources and equipment. After the technological improvements had dropped the price drastically, economies of scale began to factor deeply into this reduction,
Third, there was a lot of of knowledge stacking: These refer to the benefits of accumulated knowledge that increase as a field or industry ages that allow things to be done faster with less mistakes, due to experience and passing down of knowledge from one generation to another. in the recent years, most of the cost reduction have come from this, this is mainly due to improving the manufacturing process and reducing defects and waste.
This trend is expected to continue, in fact, according to a report by Wood Mackenzie³, solar panels will continue to decline in price in the 2020s. The report projects that by 2030, solar panels will cost $0.18 per watt on average globally. That's a further drop of 72% from today's prices!
If you're looking into solar, rest assured, it only gets better, more efficient, cheaper, as time goes on, while it already more efficient and affordable than hydrocarbon sources over the long run, it would get more so over time and the earlier you get into solar energy, the longer you get to enjoy its benefits.