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Solar power has never been cheaper, and it’s often held up as a success story for clean energy advocates. In the past four decades, the cost of some solar panels, like photovoltaic cells (PTV), has plummeted by as much as 99 percent.
But while the technology’s growth is impressive, until now we didn’t have a clear idea of all the factors that made it so cheap so quickly. There have also been questions as to whether the dramatic savings can continue – especially as renewable subsidies stall.
A new paper from MIT has looked closely at the history of PTV solar panels to figure out what has caused their price decline over time.
One of the most important ingredients identified was government policy, which means that, going forward, this may be one of the best tools for solar expansion and the fight against climate change.
Using a dynamic model that goes beyond simple correlations, the findings strongly suggest that it is, in fact, possible for governments to take steps that make solar power cheaper.
What’s more, taking these steps can foster a symbiotic relationship between technology innovation and climate policies.
When policies exist that tackle carbon emissions, the researchers noticed improvement and growth in low-carbon technologies. By growing this market, governments around the world played a critical role in reducing the cost of the technology and, in turn, the cost of cutting carbon emissions.
“This work is important in that it identifies that the growth in demand for solar PV in the past 15 years was the most important driver of the astounding cost reductions over that period,” said Gregory Nemet, a policy researcher at the University of Wisconsin at Madison, who was not involved in the study.
“Policies in Japan, Germany, Spain, California, and China drove the growth of the market and created opportunities for automation, scale, and learning by doing.”
The researchers looked at solar growth from 1980 to 2012, during which time the cost of solar panels fell by 97 percent. From above, they examined the high-level factors for one analysis: the changes in production, distribution or research. And then from below, they separately analysed the low-level factors: the basic science and engineering of the panels.
The findings reveal that six low-level factors accounted for over 60 percent of the overall drop in costs. This is a good sign because it means there are many different levers we can pull to try and keep solar power cheap and competitive.
In short, if we want solar growth to continue on this road, the more doors we can open, the better. And if we want the cost of solar panels to continue to decrease, it’s key that we figure out how to manipulate the factors that reduce cost.
Demand for the technology is also a crucial factor the team found when looking at the high-level factors. They discovered that 60 percent of the overall cost decline was because of government policies that stimulated market growth.
By implementing renewable energy standards, tariffs and a variety of subsidies, governments have “played an important part in reducing costs,” according to co-author Jessika Trancik, an expert in energy systems modelling at MIT.
In the past, governments have also helped considerably by funding research and development. In fact, this sort of investment accounted for 40 percent of the overall cost decline.
Now that the technology has improved so much, however, the impact of R&D may not be as great today – although it is still important. The researchers found instead that in the last decade, expanding manufacturing has had a greater impact on lowering costs.
And yes, while the new research is focused on the past, it’s one of our best clues for the future. Judging by the results, the authors claim there “are opportunities for further cost improvements with this technology.”
To get there, the study suggests we need a combined effort to expand manufacturing and research cheaper alternatives to PTV technology, ones that have the potential to work even better.
“Looking forward, market-stimulating policies can continue to support cost declines, through a virtuous, mutually-reinforcing cycle of technology improvement and emissions reductions,” the authors conclude.
If the world is truly serious about mitigating climate change, we need to kick our fossil fuel habit as soon as possible and turn our attention to greener sources of energy.
This study strongly suggests that governments have the power to make solar power a viable alternative energy source. The next question is – will they do it?
This study has been published in Energy Policy.