Key takeaways


he world is quickly switching to solar, and its cost efficiency is becoming spectacular. With subsidies included, utility-scale projects provide energy at a price of around $27 per MWh, which is pretty much half the price of coal-fired generation.

A short history of solar price decline

Besides, solar is becoming cheaper for homeowners as well. With the adoption of solar generation, an average household in the US can save around $1,500 annually.

However, solar power has come a long way to become that cheap. The first solar cell was invented in 1839 by French physicist Alexandre-Edmond Becquerel, and since then many inventors and entrepreneurs tried to commercialize it.  

In 1891, Clarence Kemp patented the first commercial solar water heater. Then 1883, Charles Fritts manufactured the first selenium photovoltaic cell (PV cell) and created the world's first rooftop solar array one year later. Fritts believed his invention might compete with coal-fired power plants, but it had a small commercial success due to its conversion rate of only 1%.

In the mid-1950s Bell Laboratories fabricated the first practical silicon PV cell with an efficiency reaching 6%. But it was still fairly expensive, costing around $286 per watt. A much lower-cost PV cell was created in the 1970s. Lower-grade silicon and cheaper housing cut the price down to just $20 per watt.

The development continued throughout the 1990s and 2000s with an increase in efficiency and a decrease in cost. As of today, the technology keeps becoming more efficient and affordable - the cost of solar power has fallen by 82% since 2010.

Where do we stand today?

In recent years, harnessing the sun's energy has been one of the most significant and beneficial developments in electricity production. Since it achieved a competitive price point a decade ago, its cost has been steadily declining year over year, making it a cheaper alternative to fossil fuels and even nuclear power.

The trend doesn't seem to stop anytime soon. A recent survey by Forbes showed that an overwhelming 75% of American consumers are considering installing panels in the next 5 years.

However, many are still concerned over the price of PV-generated power. U.S. Energy Information Administration (EIA) data erases any doubts with its World Energy Outlook. According to it, solar has become the cheapest energy source and one of the lowest-cost sources of electricity in history.

Experts compared all the power sources used today by their Levelized cost of energy (LCOE), which basically means the cost of power produced by an energy system over its lifespan. And the study showed that PV systems can now generate electricity at costs that are comparable to coal and gas, or even lower in many regions around the world. It can even provide electricity at or below $20 per MWh if supported through government subsidies or revenue mechanisms like feed-in tariffs. As prices for solar solutions have gone down and their level of efficacy has gone up, they are now the most cost-effective source of electricity in many countries worldwide.

Some might argue that this data only applies to the projects that produce electricity at a mass scale and has no meaning to the owners of residential installations. However, they were affected by the market shift as well.  

The International Renewable Energy Agency (IRENA) highlights in its report that LCOE in residential PV systems dropped from $0.304–$0.460 per kWh to $0.055/kWh–$0.236 per kWh over a 10-year period. Thus, the costs for homeowners declined by between 49% and 82%.

Outlook for prices is positive

Despite a minor price increase in 2021 due to supply chain constraints, converting sunlight into energy is going to keep getting cheaper over time. The US Energy Department's Solar Energy Technologies Office (SETO) presented a goal to bring down the benchmark LCOE of utility-scale photovoltaics to $0.02 per kWh by 2030. It also aims to achieve LCOE of $0.04 per kWh for commercial PV and $0.05 per kWh for residential PV. According to this strategy, residential costs may drop two-fold from the current average levels.

Overall, the solar industry has gained a lot of momentum thanks to government incentives and tax rebates which are available in about 130 countries worldwide. Government support will continue playing its role in making solar power more attractive to businesses and homeowners. EIA’s base-case scenario implies that its global capacity triples between 2020 and 2030.

On top of that, by 2030 solar is expected to produce about the same amount of electricity as hydro, with both sources accounting for about 15% each of total electricity generated. Discover top-rated Massachusetts solar companies for sustainable energy solutions. Harness the power of the sun today!

It should be noted that future prices will largely depend on the industry’s technological development. There is plenty of room for growth in the market for crystalline silicon PV products. The market share of crystalline silicon PV panels is currently around 95%, and they will continue to dominate the market through the coming decade with continued efforts on improving manufacturing methods and cost-saving features. By 2030, the efficiency of silicon modules is predicted to reach 25%.

We'll also see advances in technologies like Passivated Emitter and Rear Cell (PERC) and perovskite cells, which could lead to drastic reductions in prices.

Conclusion: harvesting the sun's energy will keep saving money for homeowners

Solar is one of the most promising sources of energy, with a lot of potential to grow in the coming years. And practically speaking, it can save you plenty of money over the long term. By investing now, you can reap low costs and high profits down the line.

Today’s solar technology has become the best option for homeowners who want to contribute to the global fight against fossil fuels as well as reduce electricity bills - U.S. consumers already save about $1,500 per year by switching to solar.

The Ivanpah Solar Power Plant, located in California's Mojave Desert, is one of the world's largest solar thermal power stations, generating clean electricity using concentrated solar power technology.

However, a lot of people still aren't convinced about installing panels due to the upfront costs, with 36% of Americans citing it as the main obstacle. But the good news is that according to current projections, technological improvements together with tax rebates and subsidies from the governments will continue to make solar steadily more affordable.

Key takeaways

Jul 12, 2023
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