MIT Study Explains Why Solar Power Costs Have Declined Dramatically

MIT researchers looked at solar power technology from two primary perspectives in order to understand the reasoning behind the decline in costs.


The reasons to use as the number one source for utility production worldwide are numerous, but as solar power develops, one particular perk continues to make solar power even more appealing year after year. Cost for solar power installation over the past four decades has dropped by nearly 99 percent. The reasons for this dramatic drop in cost have not been entirely clear, until now. Researchers at MIT, with support from the U.S. Department of Energy, set out to find what accounts for the declining costs of solar energy and renewable energy utility.  

Low-Level and High-Level Solar Mechanism Impacts Evaluated 

MIT researchers looked at solar power technology from two primary perspectives in order to understand the reasoning behind the decline in costs. The first focus was on low-level factors, with the second on high-level factors. Associate professor and researcher on the project at MIT, Jessika Trancik, noted in a write-up about their findings on solar power that low-level mechanisms deal with the psychical solar energy products themselves. They would include any sort of costs associated with the processes of solar power production and manufacturing. For example, as technology has developed, solar cells have increased their efficiency in converting sunlight into usable energy. As the efficiency of solar panels has increased, their costs have decreased. High-level mechanisms of solar power production include research and development, as well as economic influence. Examples of high-level factors would include larger factories or solar production, along with their ability to cut down on defective solar cells during production. 

The Key Role of Government Policy in Reduction of Solar Costs 

In identifying these mechanisms, MIT was able to determine a few necessary components that lead to the decline of solar power costs over the past several decades. Their researchers were able to pinpoint the cause of the savings as being rooted not just in the acceleration of technology, but in government policy. It has only been through governments’ willingness to invest in and form policy around solar technology that has given solar power the room to advance technologically. MIT found that it has been government participation has been a dominant factor in reducing costs and these findings bring to light possibilities for how solar energy can continue to take off worldwide. 

According to Trancik, any policy put in place that stimulated market growth, was responsible for around 60 percent of the solar energy cost decline. Trancik noted that these findings play a critical role in the current debate about whether or not solar energy policies actually work. Based on their research, it is clear that government policy and global markets play a role in the reduction of costs. MIT researched stated that various subsidies, feed-in tariffs, and renewable standards were most helpful in the overall reduction of solar energy costs. 

The overall implications of the study exemplify the importance of government policy in the implementation of solar power, as well the role governments play in keeping costs low and on the decline. Additionally, the report highlights the need to continually improve solar production processes and manufacturing components of solar and renewable energy. 

Solar Energy Policy in the Hands of the Government 

Government policy undoubtedly plays a role in solar energy costs, production, and the overall future of renewable and solar energy technologies. Advocates for solar energy can take from these findings a renewed sense of encouragement, as many government leaders worldwide are already jumping on board with solar technology for their own cities, states, and regions. The findings here will also encourage, if not incentivize government leaders, to support solar energy on a larger scale if they have not already. Essentially, by supporting advancement in solar technology, as well as implementing policies that push for the use of solar energy, government officials can reduce costs overall, help provide more reliable and cleaner energy for their citizens, and support a more sustainable energy future for all of us.  




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