Solar panel technology has been around in some form for a long time – Bell Labs invented the first useful solar cell more than 60 years ago, and scientists have known for centuries that the sun can be used to produce energy. However, it’s only in the last ten years or so that solar photovoltaics (PV) has really taken off as a renewable energy source. There are two major factors influencing the technology’s growth: the steady improvement of both solar panel cost and solar panel efficiency over time.
The very first solar cells, invented in the 1800s, were less than one percent efficient, not nearly enough to make them a useful energy source. It wasn’t until 1954 that Bell Labs invented the first useful silicon solar panel, which was about six percent efficient.
Since then, solar PV technology has evolved at a rapid pace. Manufacturers have been able to create solar panels that are nearly 30 percent efficient, and homeowners on the EnergySage Solar Marketplace regularly receive quotes featuring solar panels with 19 to 21 percent efficiency from solar installers. These high efficiency panels can produce 25 percent more electricity than the lower-tier economy panels that made up the majority of the market in past years.
The technology exists to increase solar panel efficiency even further. Researchers have managed to achieve 46 percent efficiency in certain laboratory tests using advanced cell structures. However, super high-efficiency panels are typically made of more expensive materials not used in rooftop solar panels, and as a result, they aren’t currently cost-effective.
Graph: Solar panel efficiency over time
Less than 10 years ago, in 2008, the cost of a solar panel installation was $8.82 per watt. The solar industry today looks very different: in addition to solar panel efficiency increasing dramatically, solar panel producers have significantly improved their manufacturing processes. Solar installers, too, can deploy solar PV across the United States more efficiently now than they could ten years ago. The result: the price of solar has fallen by over 60 percent, to just $3.36/watt.
There’s evidence that the rate at which solar prices are decreasing is picking up speed, too. From the second half of 2014 to the first half of 2015, prices featured in quotes to homeowners on the EnergySage Solar Marketplace fell by 1.85%. Between the first half of 2016 and the second half of 2016, however, the average price per watt fell by a remarkable 6.25%.
Graph: Solar panel cost over time
The price decreases over the past ten years are major reason why more and more homeowners are interested in installing solar panels. For a standard 6 kW home solar system, the average gross cost has fallen from $52,920 to just $20,160 in the past decade. Subtract the 30 percent federal tax credit for solar, and you’re looking at $14,110 for a home solar PV system that can cover most, if not all, of your electricity needs. If you own your home, why wouldn’t you consider solar?
Changes in solar panel cost over time can be explained by Swanson’s Law, which states that the price of solar PV modules decreases by about 20 percent for every doubling in global solar capacity. The law is named after Richard Swanson, founder of high-efficiency solar panel manufacturer SunPower, and indicates a phenomenon seen across many different technologies: new industries face a major learning curve, and as they improve, prices fall.
In this way, solar panel manufacturers aren’t that different from computer manufacturers. Think about how much more expensive, and less powerful, your laptop was in 2007 compared to the technology that’s available today. If solar PV technology continues along the same trend, it’s easy to envision a future where solar is on every rooftop.
Solar panel efficiency is improving dramatically, and costs are declining at a similarly rapid rate. However, the solar industry is diverse. Depending on where you look, you may not find the best deal on a system for your home or business.
The best way to ensure that you choose a solar PV system with the right combination of high efficiency and low cost is to compare all of your options on the EnergySage Solar Marketplace. Homeowners who get competing solar quotes from installers on EnergySage typically save 10% on their solar installation costs, and frequently choose packages that include some of the most efficient solar panels on the market (from companies like SunPower, LG, and Panasonic).
Vikram Aggarwal is the founder and chief executive of EnergySage, the online solar marketplace. EnergySage simplifies the process of researching and shopping for solar. By offering shoppers more choices and unprecedented levels of transparency, EnergySage allows consumers to select the solar installation quote that provides the best value for them, quickly and easily. Read all of Vikram's posts here.
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