The Top 5 Reasons For Falling Solar Costs

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The Top 5 Reasons For Falling Solar Costs

View "TOP 5 REASONS FOR FALLING SOLAR COSTS" Infographic

Solar costs have dropped an unprecedented 99% in the last four decades. Here's a quick infographic exploring what the top 5 reasons that lead to this fall in cost. If you'd like to learn more, please check out our definitive article: "An Energy Revolution: What Caused Solar Costs to Fall 99%?"

1. SOLAR PANEL EFFICIENCY

One of the leading reasons for falling solar costs is improved efficiencies in solar panels and the manufacturing of solar panels. For some technologies, panel efficiency has nearly doubled in the past 25 years. Today, the most efficient solar panels are approximately 23%.

2. RESEARCH & DEVELOPMENT

By far the biggest high-level factor to falling costs is R&D. It helps drives new technologies, greater efficiency, improved silicon usage, and much more. Both private and publicly funded R&D enabled companies to expand their production, experiment and improve to develop a superior end-product.

3. ECONOMIES OF SCALE

Massive growth in the solar industry has caused plant sizes and production rates to increase drastically. As a result, fixed costs are spread over a greater output, which reduces per-unit costs. There are also discounts in raw material prices when purchased in large quantities.

4. MATERIAL COSTS 

While the price of all material inputs has fallen significantly, the primary material in panel production is Silicon. Its price has dropped drastically: in 2008, refined silicon for solar cells went from costing roughly $450 per kilo to about $100.

5. GOVERNMENT POLICY 

Government incentives and spending made the biggest contribution to cost-per-watt declines for solar panels since the 1980s. By funding early-stage R&D and helping to commercialize solar, government policy has helped to create larger markets, which in turn drive down prices.

 

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