February 11th, 2018 by Zachary Shahan
Solar power prices have been dropping faster than people expected, even faster than experts expected, and even faster than bullish experts expected.
I wrote about this general point a couple of years ago for an article for The Economist Group. The question I was supposed to explore was whether we needed solar technology breakthroughs in order for solar to take over the electricity generation market. Various solar experts emphasized to me that known, predictable, incremental improvements in solar PV technology and manufacturing would keep bringing down the cost of solar PV — at an incredible clip. The standout point was from Jenny Chase of Bloomberg New Energy Finance (BNEF), who highlighted that her team forecast a solar module* price drop from 62¢/watt in 2015 to 21¢/watt by 2040. That was with an assumption of no technological breakthroughs.
During a Zayed Future Energy Prize review committee meeting in September (I’m on the committee), I brought this up in one of the discussions we were having. Other analysts from BNEF who were there noted, “Actually, they’ve come down much quicker than we expected.” The average had already dropped to approximately 40¢/watt. They showed me a graph of the more recent cost drops as friendly proof. Astounding — even BNEF’s relatively “bullish” projections were far too conservative.