No other power-generation technology matched solar’s pace of cost reduction this past decade. The game will change again in the 2020s.
Solar energy grew by leaps and bounds in the 2010s. According to Wood Mackenzie, global annual solar installations grew more than sixfold this past decade, from 16 gigawatts in 2010 to 105 gigawatts in 2019.
In the meantime, multi-silicon solar module prices dropped from over $2 per watt to just over $0.20 per watt in Q3 2019. That 90 percent price reduction is one of the most critical factors driving the global expansion of solar.
No other electricity generation technologies have been able to keep up with solar’s pace of cost reduction over this period.
The U.S. Energy Information Administration’s data shows that the overnight capital cost required to build new onshore wind and conventional natural gas combined-cycle power plants in the U.S. decreased by 38 percent and 2 percent, respectively, between 2010 and 2018.
In the meantime, the cost to build combustion turbine plants has gone up by 11 percent. The same unfavorable economics have led to very few new coal plant constructions in the second half of the 2010s.
Economies of scale and supply-chain development drove solar’s cost reduction
The main reason solar modules have become increasingly cost-competitive is due to economies-of-scale production along the entire supply chain. Global polysilicon production capacity grew more than fourfold this past decade, while the price of polysilicon, the primary feedstock for solar module production, declined from over $80 in 2010 to just $8.40 in 2019.
Similarly, accompanying the steep module price decline was a fivefold increase in the global module production capacity. Wafer and solar cell production capacity also experienced huge growth over the decade.
Global solar manufacturing capacity vs. module price, 2010-2020E
Source: Wood Mackenzie
This supply-chain-wide development created a robust and competitive solar marketplace. Nowadays, successful manufacturers continue to produce at scale while innovating their business models and technology offerings.
Cheaper AND better
In addition to their significant cost decline, solar panels have improved a lot in the past decade.
The average nameplate power output of a standard 72-cell multi-silicon module was around 290 watts in 2010. Today, consumers can expect at least 345 watts at one-tenth of the 2010 price. It is like getting the latest iPhone at a 90 percent discount on the old iPhone price. Although that may never happen in the mobile phone market, solar has been seeing better products at lower prices every year for a decade.
The 2010s also witnessed solar modules getting better in a few other ways:
• Higher-efficiency mono silicon-based modules are replacing multi silicon modules to become the predominant module type.
• Modules increasingly use advanced cell architectures such as passivated emitter and rear contact (PERC), interdigitated back contact (IBC), heterojunction with intrinsic thin layer, and bifacial cell technologies.