Solar PV Costs

Solar PV module prices fell from $76/W (1976) to roughly $0.10/W (2024) — a 99.9% decline over five decades. Utility-scale solar LCOE now sits at $30–60/MWh in good locations, below new-build coal and gas in much of the world. The cost curve has not stopped — every doubling of cumulative installed capacity produces roughly a 25% further price decline.

$0.10/W

Solar PV module spot price (2024)

$76/W

Module price in 1976 (real terms)

~25%

Cost decline per doubling of cumulative capacity

$30–60/MWh

Utility-scale solar LCOE (2024)

Key insights

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Swanson's Law: a learning curve

Richard Swanson observed that solar module prices fall ~20% per doubling of cumulative installed capacity — a learning rate similar to many manufactured goods but sustained over decades. The mechanism: cell efficiency improvements, manufacturing scale, supply chain integration. Each year's price decline is small (~10%); the cumulative effect over 40 years is the 99% drop.

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Cost parity crossed quietly

By the mid-2010s, utility-scale solar LCOE crossed below new-build coal in sunny regions (India, Middle East, southwestern US). By 2020 it was below gas in most of the OECD. By 2024 unsubsidised solar bids in Saudi Arabia, UAE, Chile and Spain have come in below $20/MWh. The remaining cost is dominated by balance-of-system (inverters, racking, labour, permitting) — modules are now a minority of total installed cost.

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China dominates the supply chain

China accounts for ~80% of global solar manufacturing capacity at every stage — polysilicon, wafers, cells, modules. The US Inflation Reduction Act and EU Net Zero Industry Act aim to build alternative domestic capacity, but timelines are long (3-5 years per stage). The current oversupply (2024 Chinese capacity exceeds global demand by ~50%) is driving prices below cost of production for many manufacturers — a stress test for the industry's medium-term consolidation.

Key Finding: Two and a half orders of magnitude decline over 48 years. The 2008-09 silicon glut and 2023-24 Chinese overcapacity are visible as acceleration episodes.

Key Finding: Solar LCOE varies 3× across regions, driven mostly by capacity factor (sunshine) and capital cost.

Methodology & caveats

Module price vs system cost

Module prices ($/W) are what manufacturers sell panels for. System costs ($/W installed) include inverters, racking, wiring, labour, permitting and connection. Modules were 60-70% of system cost in 2010; they're under 30% today. The 'soft costs' (labour, permitting, customer acquisition) have not fallen at the same rate, especially for residential installs in the US.

LCOE caveats

Levelized Cost of Energy averages capital, fuel, O&M and financing costs over the project lifetime divided by lifetime generation. It ignores intermittency, transmission costs, and the time-of-day value of generation. As solar penetration rises, the marginal value of additional midday generation falls — the 'value-deflation' problem. Storage costs need to be added at high penetration.

Swanson's Law isn't a guarantee

Past learning rates may not continue indefinitely. The 25% per doubling continued for 40+ years through silicon wafer, cell efficiency, manufacturing scale and Chinese cost advantages. Future doublings would need to come from new material systems (perovskites, tandem cells), automation of installation, or scale beyond current Chinese capacity. None is guaranteed, though none looks impossible either.