Will the cost of solar power continue to fall?



As technology improves, the price of solar panels is falling. Author

Tomas Pueyo explains whether the costs of solar power will continue to fall.

Can Solar Costs Keep Shrinking? - by Tomas Pueyo
https://unchartedterritories.tomaspueyo.com/p/can-solar-costs-keep-shrinking

The price of solar panels used for solar power generation has been declining from 1975 to 2021. The graph below shows the global price trend of solar panels over the years. In 2021, the price of a solar panel per watt fell below $0.5 (about 73 yen).



The main factor behind the decline in the manufacturing cost of solar panels is the increase in production volume due to the increase in the number of installations. Below is a graph showing the trend in installed solar panels by year. In 2022, 1000GW of solar panels will be installed worldwide, of which 400GW will be installed in China. Combined with the spread of solar panels, the cost of generating electricity has also fallen significantly.



On the other hand, according to John Arnold, co-chairman of

Arnold Ventures , the cost of generating electricity from both solar and wind power has been increasing since 2020. The graph below shows the amount of money needed to generate 1 MWh in the United States, which was about $27 (about 3,940 yen) per MWh in the second quarter of 2020, but has soared to $53.68 (about 7,840 yen) per MWh in the second quarter of 2024. Pueyo analyzes the reason for this as 'because energy consumption growth has been stagnant for decades.'



The '

Henry Adams Curve ,' proposed in 1918, predicted a trend of 7% annual growth in total energy consumption. However, when comparing the actual energy consumption in the United States with the Henry Adams Curve, we can see that the trend has been diverging since the 1970s.



According to Pueyo, if the Henry Adams curve were correct, we would be consuming two to five times as much energy as we actually do today, and our GDP per capita in the United States would have reached $100,000 to $200,000. 'Lack of energy consumption makes us poorer. If we want to get richer, we have to consume more energy. To do that, we need to use energy that doesn't cost money to generate,' Pueyo argues.

Below is a graph showing the trends in 'unit cost,' which indicates the price of solar panels, and 'soft costs,' which indicate inspection fees, interconnection fees, transmission line usage fees, and consumption taxes. Although unit costs have been declining since 2010, soft costs have not changed significantly. In order to reduce the cost of solar power generation, these 'soft costs' need to be reduced, but Pueyo speculates that taxes, inspection fees, interconnection fees, etc. will not decrease significantly. Therefore, Pueyo argued that it is necessary to break down soft costs and understand which costs can be reduced.



Although the cost of solar power generation modules themselves has fallen in recent years, they still account for 39% of the cost to generate 1 W. However,

inexpensive solar panels that reduce power generation costs by 10% to 12% have been developed, and costs are expected to fall further in the future.

In addition, solar power generation requires costs such as 'racks to rotate according to the movement of the sun,' 'large-scale civil engineering and labor costs to install the racks,' 'land usage fees for installing the racks,' and 'transportation costs to transport the equipment.' Pueyo claims that these costs can be reduced by developing 'solar panels that are extremely cheap and can be installed simply by placing them directly on the ground.'



In fact, the solar panels developed by

Erthos are being promoted as being able to reduce costs by achieving benefits such as 'reducing the amount of land required by approximately 50%, reducing wiring by 70%, shortening construction time by 50%, and extending the lifespan of the panels.'



'One of the big advantages of solar power is how fast it is,' Pueyo said. 'Solar farms don't take as long to build and are cheap to build, so cost reductions can be achieved much faster than with nuclear or other generating facilities.'

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