The Cost Of Solar Power Keeps Falling–But It’s Not All About Price

To truly realize the environmental and health benefits of solar, political and business innovation is needed as much as technological progress.

The Cost Of Solar Power Keeps Falling–But It’s Not All About Price
Illustration: Nataliia G via Shutterstock

Things are going really well for solar. The cost of solar power has fallen by 65% in the last five years, and there’s been a 10-fold increase in the number of solar installations. And these trends are surely set to continue as the technology becomes cheaper and more productive, in the manner of Moore’s law.


But this isn’t enough for solar to take up a big role in the energy system. As a new report from the U.S. Department of Energy shows, solar’s value is still conditional on where and when it’s produced and who is producing it (homeowners, businesses or utilities). It’s not all about price.

If we want more solar, says the DOE, we also have worry what it costs to market, install, and interconnect the system (these “soft costs” are higher in the U.S. than in other countries), whether the energy can be stored in batteries for later use, and whether accountants measure its environmental benefits.

The DOE’s 2011 SunShot Initiative looked to reduce the cost of solar energy technologies 75% by 2020. It now says we’re 70% of the way there. But it says before solar becomes truly mainstream–say a 25% market penetration–other things need to happen as well. The grid needs more flexibility and resilience, for example in the doubling the amount of advanced inverter capacity. We need financial innovation to allow people to sign up for solar. And we need market reform to stop utilities worried about their business model from throttling solar’s growth. Solar experts explore how to do this in a series of reports from the National Renewable Energy Laboratory.

If we do manage to meet the Sunshot Initiative’s goal of meeting 27% of U.S. energy demand with solar by 2050, the environmental benefits would be substantial, according to the last paper in the series. We’d see a 10% drop in greenhouse gas emissions and plenty of lives would be saved from better air quality.

“By displacing that generation, solar could produce $426 billion in savings from future health and environmental damages and save more than 25,000 lives,” the report says.

About the author

Ben Schiller is a New York staff writer for Fast Company. Previously, he edited a European management magazine and was a reporter in San Francisco, Prague, and Brussels.