The cost of solar panels has dropped by more than 99 percent since the 1970s, enabling widespread adoption of photovoltaic systems that convert sunlight into electricity.
A new MIT study drills down on specific innovations that enabled such dramatic cost reductions, revealing that technical advances across a web of diverse research efforts and industries played a pivotal role.
The findings could help renewable energy companies make more effective R&D investment decisions and aid policymakers in identifying areas to prioritize to spur growth in manufacturing and deployment.
The researchers’ modeling approach shows that key innovations often originated outside the solar sector, including advances in semiconductor fabrication, metallurgy, glass manufacturing, oil and gas drilling, construction processes, and even legal domains.
“Our results show just how intricate the process of cost improvement is, and how much scientific and engineering advances, often at a very basic level, are at the heart of these cost reductions. A lot of knowledge was drawn from different domains and industries, and this network of knowledge is what makes these technologies improve,” says study senior author Jessika Trancik, a professor in MIT’s Institute for Data, Systems, and Society.
Trancik is joined on the paper by co-lead authors Goksin Kavlak, a former IDSS graduate student and postdoc who is now a senior energy associate at the Brattle Group; Magdalena Klemun, a former IDSS graduate student and postdoc who is now an assistant professor at Johns Hopkins University; former MIT postdoc Ajinkya Kamat; as well as Brittany Smith and Robert Margolis of the National Renewable Energy Laboratory. The research appears today in PLOS ONE.
Identifying innovations
This work builds on mathematical models that the researchers previously developed that tease out the effects of engineering technologies on the cost of photovoltaic (PV) modules and systems.
In this study, the researchers aimed to dig even deeper into the scientific advances that drove those cost declines.
They combined their quantitative cost model with a detailed, qualitative analysis of innovations that affected the costs of PV system materials, manufacturing steps, and deployment processes.
“Our quantitative cost model guided the qualitative analysis, allowing us to look closely at innovations in areas that are hard to measure due to a lack of quantitative data,” Kavlak says.
Building on earlier work identifying key cost drivers — such as the number of solar cells per module, wiring efficiency, and silicon wafer area — the researchers conducted a structured scan of the literature for innovations likely to affect these drivers. Next, they grouped these innovations to identify patterns, revealing clusters that reduced costs by improving materials or prefabricating components to streamline manufacturing and installation. Finally, the team tracked industry origins and timing for each innovation, and consulted domain experts to zero in on the most significant innovations.
All told, they identified 81 unique innovations that affected PV system costs since 1970, from improvements in antireflective coated glass to the implementation of fully online permitting interfaces.
“With innovations, you can always go to a deeper level, down to things like raw materials processing techniques, so it was challenging to know when to stop. Having that quantitative model to ground our qualitative analysis really helped,” Trancik says.
They chose to separate PV module costs from so-called balance-of-system (BOS) costs, which cover things like mounting systems, inverters, and wiring.
PV modules, which are wired together to form solar panels, are mass-produced and can be exported, while many BOS components are designed, built, and sold at the local level.
“By examining innovations both at the BOS level and within the modules, we identify the different types of innovations that have emerged in these two parts of PV technology,” Kavlak says.
BOS costs depend more on soft technologies, nonphysical elements such as permitting procedures, which have contributed significantly less to PV’s past cost improvement compared to hardware innovations.
“Often, it comes down to delays. Time is money, and if you have delays on construction sites and unpredictable processes, that affects these balance-of-system costs,” Trancik says.
Innovations such as automated permitting software, which flags code-compliant systems for fast-track approval, show promise. Though not yet quantified in this study, the team’s framework could support future analysis of their economic impact and similar innovations that streamline deployment processes.
Interconnected industries
The researchers found that innovations from the semiconductor, electronics, metallurgy, and petroleum industries played a major role in reducing both PV and BOS costs, but BOS costs were also impacted by innovations in software engineering and electric utilities.
Noninnovation factors, like efficiency gains from bulk purchasing and the accumulation of knowledge in the solar power industry, also reduced some cost variables.
In addition, while most PV panel innovations originated in research organizations or industry, many BOS innovations were developed by city governments, U.S. states, or professional associations.
“I knew there was a lot going on with this technology, but the diversity of all these fields and how closely linked they are, and the fact that we can clearly see that network through this analysis, was interesting,” Trancik says.
“PV was very well-positioned to absorb innovations from other industries — thanks to the right timing, physical compatibility, and supportive policies to adapt innovations for PV applications,” Klemun adds.
The analysis also reveals the role greater computing power could play in reducing BOS costs through advances like automated engineering review systems and remote site assessment software.
“In terms of knowledge spillovers, what we've seen so far in PV may really just be the beginning,” Klemun says, pointing to the expanding role of robotics and AI-driven digital tools in driving future cost reductions and quality improvements.
In addition to their qualitative analysis, the researchers demonstrated how this methodology could be used to estimate the quantitative impact of a particular innovation if one has the numerical data to plug into the cost equation.
For instance, using information about material prices and manufacturing procedures, they estimate that wire sawing, a technique which was introduced in the 1980s, led to an overall PV system cost decrease of $5 per watt by reducing silicon losses and increasing throughput during fabrication.
“Through this retrospective analysis, you learn something valuable for future strategy because you can see what worked and what didn’t work, and the models can also be applied prospectively. It is also useful to know what adjacent sectors may help support improvement in a particular technology,” Trancik says.
Moving forward, the researchers plan to apply this methodology to a wide range of technologies, including other renewable energy systems. They also want to further study soft technology to identify innovations or processes that could accelerate cost reductions.
“Although the process of technological innovation may seem like a black box, we’ve shown that you can study it just like any other phenomena,” Trancik says.
This research is funded, in part, by the U.S. Department of Energy Solar Energies Technology Office.
