Solar energy has plunged in price, where does it go from here?

In the year 2000, the world had roughly four Gigawatts of solar power capacity installed, and it didn’t seem to be going anywhere fast. In 2002, the International Energy Agency forecast suggested that, by 2020, global solar capacity would still be hovering at around 10GW and still barely register on the global energy markets.
How things change. Over the 15 years that followed, solar energy capacity expanded by 5,700 percent, reaching 227GW. The International Energy Agency revised its solar estimates upwards three times over that span, but its most recent estimate, over 400GW of installed capacity by 2020, is already falling behind the curve of solar’s growth. In 2015, the most recent year that numbers are available, 57 Gigawatts’ worth of solar panels were shipped. That’s enough to add 400GW of new capacity in seven years, under the completely unrealistic assumption that our manufacturing capacity won’t expand in the mean time.
If most projections have been wrong, is there anything we can say about the future? An international team of energy experts makes an attempt to figure out where solar might be going out to the 2030s, when they expect we’ll have Terawatts’ worth of photovoltaics on our grids.
Their analysis includes many of the highlights above, along with a few more. For example, it notes that power purchase agreement prices for solar power have dropped by about 75 percent over the last seven years alone, leaving them at about $50 per Megawatt-hour in the US. Globally, many sites are seeing prices approach $30/MW-hour. For those reasons alone, the authors expect that the US will continue to install from 10 to 15GW of new solar annually through 2020—about double the rate that Germany peaked at earlier this decade. Globally, solar manufacturing capacity will head up to 100GW annually.
But to a certain extent, solar is now the victim of its own success. As it rapidly became commoditized, the investment money needed to continue to expand manufacturing capacity has begun to tail off. Investment for research into new technology is also constrained.
But, they say investment now could really pay off. It’s plausible, they argue, to get the levelized cost of solar power down to a quarter of what it is now, to the $30/MW-hour range. For context, that would be a third the cost of coal and half the price of natural gas.
Doing so, however, would require a large set of optimizations: more efficient panels, lower manufacturing costs, cheaper components, and so on. Some of these are already in the works. First Solar, the authors say, has plans to produce panels for even less than would be needed to reach that goal. And, after years of stagnation, silicon’s efficiencies have crept up. The two major thin-film techs, CIGS and Cad-Tel, have also seen efficiencies rise. And there’s always the chance that emerging tech like perovskite cells will take off.
It’s also possible to shift the financials dramatically by increasing the durability of panels. Tech has been demonstrated that lowers the drop in efficiency to about 0.2 percent a year, which would leave panels usable for up to 50 years. That would give solar installations lifetimes that exceed those of many fossil fuel plants and would allow a return on investment over a much longer period.
Going well below the costs of fossil fuels may be essential to the continued expansion of solar. The authors note that a variety of studies have suggested that it becomes challenging to stabilize the electric grid once variable sources exceed 30 to 40 percent of the total electricity supply. Adding batteries could essentially change solar from a variable energy source to a dispatchable one.
Right now, however, with solar more expensive than most other energy sources, tacking on batteries is simply not economically feasible. But the authors suggest that, by 2030, projections of battery tech and costs, combined with their projections for solar power, would leave solar + batteries competitive with current coal prices.
In addition, batteries can serve a variety of functions in stabilizing the grid. Specifically, they can be managed to respond to sudden changes in supply or demand. Currently, that function is provided by the inertia of the large spinning hunks of metal found in traditional generators, but those will become less common on an increasingly renewable grid.
The authors note that better grid management could also mitigate some of the challenges posed by intermittent energy sources. This includes demand-response, in which customers receive benefits for delaying high-energy-use activities until the supply of renewable energy is abundant. This could involve anything from being able to set your washing machine to start its run once electricity prices drop below a set point, to over-cooling or heating buildings overnight, allowing them to use less power the next day.
It’s also possible to have grid-aware management of the batteries of electric vehicles, which should be present in much larger numbers if the battery improvements mentioned above come to be. By slightly adjusting the rate of charging of millions of vehicles, a grid could easily tolerate temporary bumps in supply or demand.
If all of this comes to pass, the authors suggest, it’s possible that the world will have somewhere over 5 Terawatts of solar capacity by 2030. And, if we get there, we’d have the manufacturing capacity to install another Terawatt annually throughout the 2030s. Even if the panels only produce 30 percent of their optimal capacity, that would still take a big chunk of global power demand, which currently requires about 15TW of generating capacity.