Solar panel technology has been around in some form for a long time – Bell Labs invented the first useful solar cell more than 60 years ago, and scientists have known for centuries that the sun can be used to produce energy. However, it’s only in the last ten years or so that solar photovoltaics (PV) has really taken off as a renewable energy source. There are two major factors influencing the technology’s growth: the steady improvement of both solar panel cost and solar panel efficiency over time.
Solar panel efficiency over time
The very first solar cells, invented in the 1800s, were less than one percent efficient, not nearly enough to make them a useful energy source. It wasn’t until 1954 that Bell Labs invented the first useful silicon solar panel, which was about six percent efficient.
Since then, solar PV technology has evolved at a rapid pace. Manufacturers have been able to create solar panels that are nearly 30 percent efficient, and homeowners on the EnergySage Solar Marketplace regularly receive quotes featuring solar panels with 19 to 21 percent efficiency from solar installers. These high efficiency panels can produce 25 percent more electricity than the lower-tier economy panels that made up the majority of the market in past years.
The technology exists to increase solar panel efficiency even further. Researchers have managed to achieve 46 percent efficiency in certain laboratory tests using advanced cell structures. However, super high-efficiency panels are typically made of more expensive materials not used in rooftop solar panels, and as a result, they aren’t currently cost-effective.
Graph: Solar panel efficiency over time
Cost of solar panels over time: a tale of falling prices
Less than 10 years ago, in 2008, the cost of a solar panel installation was $8.82 per watt. The solar industry today looks very different: in addition to solar panel efficiency increasing dramatically, solar panel producers have significantly improved their manufacturing processes. Solar installers, too, can deploy solar PV across the United States more efficiently now than they could ten years ago. The result: the price of solar has fallen by over 60 percent, to just $3.36/watt.
There’s evidence that the rate at which solar prices are decreasing is picking up speed, too. From the second half of 2014 to the first half of 2015, prices featured in quotes to homeowners on the EnergySage Solar Marketplace fell by 1.85%. Between the first half of 2016 and the second half of 2016, however, the average price per watt fell by a remarkable 6.25%.
Graph: Solar panel cost over time
The price decreases over the past ten years are a major reason why homeowners are increasingly interested in installing solar panels. For a standard 6 kW home solar system, the average gross cost has fallen from $52,920 to just $20,160 in the past decade. Subtract the 30 percent federal tax credit for solar, and you’re looking at $14,110 for a home solar PV system that can cover most, if not all, of your electricity needs. If you own your home, why wouldn’t you consider solar?
Changes in solar panel cost over time can be explained by Swanson’s Law, which states that the price of solar PV modules decreases by about 20 percent for every doubling in global solar capacity. The law is named after Richard Swanson, founder of high-efficiency solar panel manufacturer SunPower, and indicate a phenomenon seen across many different technologies: new industries face a major learning curve, and as they improve, prices fall.
In this way, solar panel manufacturers aren’t that different from computer manufacturers. Think about how much more expensive, and less powerful, your laptop was in 2007 compared to the technology that’s available today. If solar PV technology continues along the same trend, it’s easy to envision a future where solar is on every rooftop.
Three Tips for Solar Shoppers
Homeowners who get multiple quotes save 10% or more
As with any big ticket purchase, shopping for a solar panel installation takes a lot of research and consideration, including a thorough review of the companies in your area. A recent report by the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) recommended that consumers compare as many solar options as possible to avoid paying inflated prices offered by the large installers in the solar industry.
To find the smaller contractors that typically offer lower prices, you’ll need to use an installer network like EnergySage. You can receive free quotes from vetted installers local to you when you register your property on our Solar Marketplace – homeowners who get 3 or more quotes can expect to save $5,000 to $10,000 on their solar panel installation.
The biggest installers typically don’t offer the best price
The bigger isn’t always better mantra is one of the main reasons we strongly encourage homeowners to consider all of their solar options, not just the brands large enough to pay for the most advertising. A recent report by the U.S. government found that large installers are $2,000 to $5,000 more expensive than small solar companies. If you have offers from some of the big installers in solar, make sure you compare those bids with quotes from local installers to ensure you don’t overpay for solar.
Comparing all your equipment options is just as important
National-scale installers don’t just offer higher prices – they also tend to have fewer solar equipment options, which can have a significant impact on your system’s electricity production. By collecting a diverse array of solar bids, you can compare costs and savings based on the different equipment packages available to you.
There are multiple variables to consider when seeking out the best solar panels on the market. While certain panels will have higher efficiency ratings than others, investing in top-of-the-line solar equipment doesn’t always result in higher savings. The only way to find the “sweet spot” for your property is to evaluate quotes with varying equipment and financing offers.
For any homeowner in the early stage of shopping for solar that would just like a ballpark estimate for an installation, try our Solar Calculator that offers up front cost and long term savings estimates based on your location and roof type. For those looking to get quotes from local contractors today, check out our quote comparison platform.