A kilowatt of solar electricity for 3 cents a kilowatt hour by 2030…is this really attainable in the U.S.? According to the SunShot Initiative, a program by the Department of Energy, this goal has “multiple realistic pathways.”
In fact, the initiative has already achieved it’s 2020 utility-scale solar goal of power for $.06 a kilowatt hour recently, three years ahead of schedule.
In a nutshell, the cost of solar energy has plummeted in recent years and is set to continue to drop. In fact, solar energy has already achieved price parity in twenty U.S. states. This would have been unimaginable just a decade ago.
Let’s look under the hood to understand why the cost of solar power has plummeted.
Manufacturing Costs Take a Dive
The cost of solar panels, inverters and solar panel racking systems have declined at a steady pace, resulting in considerable price declines over time. Manufacturing efficiency gains, a drop in polysilicon prices (a material used in PV panels), and competition among manufacturers are largely responsible.
This phenomenon is common with many new products as production increases cause declines in cost.
Solar Efficiency Improvements
As solar panels and components increase solar electricity output, solar energy costs are falling. Now, most solar panels on the market are between 14 and 18 percent efficient, far more efficient than a decade ago.
Panel efficiency gains help reduce some other associated expenses, such as racking, installation, and transportation costs because fewer panels are needed to produce a given amount of energy.
Market Synergy Encourages More Growth
As the cost of solar components falls, more people go solar. As manufacturers make more panels and components, manufacturing processes are improved and streamlined.
In addition, people tend to go solar when their neighbors do. Thus, solar installations encourage greater growth.