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The decreasing cost of solar

27th March 2019

Why does the cost of renewable energy continue to get cheaper?

Because Solar power is a technology, not a fuel.

For most of the last century, energy prices have been on a roller coaster. The cost of oil fluctuates wildly and the average gas tariff in 2006 was almost £200 cheaper per year than what we are paying today. 

So, how has the cost of solar power managed to consistently and continuously decline over the last 40 years? 

Simply because it has more in common with your smart phone than a pile of coal which can only be used once, while solar panels and your phone continue to provide value. 

Like LED bulbs, computers, smartphones, and every other kind of technology, the secret of solar power’s astounding cost declines boils down to three things - Increasing efficiencies, Manufacturing scale and Decreasing prices for raw materials. 

1. Increasing efficiencies 
Funding research in solar PV has meant the basic science of photovoltaics has had a substantial impact...

2. Manufacturing scale

The more you make, the cheaper it gets. Similar to the Experience Curve which explains that organisational learning increases as manufacturing volumes grow. Solar has Swanson’s Lawwhich suggests that the cost of solar drops 20% for every doubling of manufacturing volume. Which, so far, has proven accurate.

3. Decreasing prices for raw materials

The greater part of a solar cell is made of silicon while the rest is silver, aluminium, and some trace materials. A glass front, aluminium and plastic frame holds it all together. None of these materials are rare or likely to run out any time soon. In fact, researchers continue to make breakthroughs that reduce the amount of all these materials needed for a functioning solar array.

Long Live Solar!

The cost of solar is likely to continue to decrease, as it has done over the last 40 years, making what was once only available on space satellites, affordable for millions of homes and businesses.

Also, regardless of Swanson's Law , the rapidly increasing cost of electricity is going to be further incentive to install solar PV, despite the end of subsidies in the UK. The Independant newspaper reported that the cost of electricity increased by 21% in only 5 months in 2018, while this chart shows the relentless rise in wholesale prices in just a year!

Bottom line, the cost of solar will continue to drop for decades, making owning a solar PV system attractive to homeowners and businesses alike.

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