The Shift to Solar Continues to Accelerate; or, Technological Change as it Happens

Solar photovoltaic (PV) power is the cheapest in the world, and the price is still falling. But how did that happen?

Solar photovoltaic is not really a new technology. The first solar cell was built in 1881, the first rooftop solar panel was installed in 1884, and all modern PV cells follow a pattern laid down by Bell Labs in 1954. For the next twenty years much of the engineering was done for satellites and other space craft; in 1974, 96% of the solar PV cells sold in the US went into spacecraft. From there solar moved into being a power source for remote installations like lighthouses and radio signal repeaters in the Australian Outback. Ironically, one of the first big terrestrial uses of solar cells was to power offshore oil rigs. From there the technology kept getting better and cheaper, expanding into new niches as the cost fell. The story is basically just one small engineering improvement after another until by around 2010 they added up to a system cheap enough to compete with other power sources, launching the solar boom.

Solar PV’s low cost is the result of its steadily falling in price over many decades. In 1957 solar PV electricity cost roughly $300,000 per megawatt-hour in 2019 dollars. By 2019, in the sunniest locations that had fallen to roughly $20 per megawatt-hour, 15,000 times less. And it's still getting cheaper. In 2021, the DOE set a goal to reduce the cost of solar PV by another 50% by 2030.

Because of its low cost, while solar PV is still a small fraction of overall electricity generation (around 6% in the US), it’s an increasingly large fraction of new electricity generation capacity. Of the 151 gigawatts of planned electricity generating plants tracked by the EIA, 49% of them are solar PV projects.

Similar trends are happening worldwide. Globally, installed solar PV capacity is increasing by roughly 20% to 30% per year. Worldwide solar PV generation went from 34 terawatt-hours in 2010 (around 0.2% of total electricity use) to over 1000 terawatt-hours in 2021, close to 5% of world capacity.

That's a 2940% increase in 11 years. The explosion of solar power is not happening because utility companies suddently got woke; it's just simple economics. As soon as the cost fell below that of other systems, the market responded as markets do.

It's also worth noting that both government initiatives and private companies played major roles here; the modern photovoltaic cell was not created by either goverment or private industry, but by both working together.