Solar photovoltaics (PVs) are now among the cheapest forms of generating electricity in the world as the cost of producing energy from solar power has dropped 99 percent over four decades. But how did it happen? A new study from the Massachusetts Institute of Technology (MIT) found that government support and technology improvements were key to dropping the costs of solar power.
The study covered the drop in prices between 1980 and 2012, a period during which the cost of PV panels fell by 97 percent, making it one of the cheapest electric generating technologies available. Technology improvements and government policies were responsible for the price drops, it found.
In terms of technology, it determined that each of six low-level factors accounted for more than 10 percent of the overall drop in costs. Four of those factors accumulatively accounted for 60 or more percent of the cost drops.
The study was led by MIT Associate Professor Jessika Trancik, postdoc Goksin Kavlak, and research scientist James McNerney, was published in the peer-reviewed journal Energy Policy. It found that while an increase in conversion efficiency—the ability to convert more sunlight into electricity was tantamount to reducing costs of PV, but that governments’ efforts to help grow markets were also key to its growth.
Tranick said the study showed “the importance of having many different ‘knobs’ to turn, to achieve a steady decline in cost.” Having the multiple opportunities to reduce costs, it found, meant that it was less likely the mechanisms used would be quickly exhausted.
In terms of solar panels, early on research and development drove cost-reductions through technology improvements, like improving production processes and reducing the number of defective solar cells. In the last ten years the study covered increasing the economies of scale and creating large factories to produce solar cells has helped reduce costs.
“This raises the question of which factors can help continue the cost decline,” Trancik said. “What are the limits to the size of the plants?”
The other key factors were government policies that helped grow markets around the world. Tranick said that policies stimulating solar market growth accounted for about 60 percent of cost declines in solar PV. Those policies included renewable portfolio standards, feed-in tariffs, and subsidies. Research and development funded by nations accounted for the other 40 percent of government-related cost drops. The report singled out policies in China, Germany, Japan, Spain, and California that drove the growth of the market, creating opportunities to learn by doing, scale manufacturing and automate.
“For a long time there has been a debate about whether these policies work—were they really driving technological improvement? Now, we can not only answer that question, we can say by how much,” Tranick contended.
The study, which was supported by the Department of Energy, will also help the researchers use similar methodology to analyze the cost reductions of other technologies including the balance of systems cost for solar power and nuclear, Kavlak said. It also suggested there could be further cost cuts achieved in solar by improving the efficiency of manufacturing systems.Tweet