# The Moore's Law of solar energy

## Solar cost per watt is dropping on an exponential curve, and will drop below coal by 2020.

This article was originally posted at Scientific American. It’s reprinted with permission.

The sun strikes every square meter of our planet with more than 1,360 watts of power. Half of that energy is absorbed by the atmosphere or reflected back into space. Seven hundred watts of power, on average, reaches Earth’s surface. Summed across the half of the Earth that the sun is shining on, that is 89 petawatts of power. By comparison, all of human civilization uses around 15 terrawatts of power, or one six-thousandth as much. In 14 and a half seconds, the sun provides as much energy to Earth as humanity uses in a day.

The numbers are staggering and surprising. In 88 minutes, the sun provides 470 exajoules of energy, as much energy as humanity consumes in a year. In 112 hours — less than five days — it provides 36 zettajoules of energy – as much energy as is contained in all proven reserves of oil, coal, and natural gas on this planet.

If humanity could capture one tenth of one percent of the solar energy striking the Earth — one part in one thousand — we would have access to six times as much energy as we consume in all forms today, with almost no greenhouse gas emissions. At the current rate of energy consumption increase — about 1 percent per year — we will not be using that much energy for another 180 years.

It’s small wonder, then, that scientists and entrepreneurs alike are investing in solar energy technologies to capture some of the abundant power around us. Yet solar power is still a minuscule fraction of all power generation capacity on the planet. There is at most 30 gigawatts of solar generating capacity deployed today, or about 0.2 percent of all energy production. Up until now, while solar energy has been abundant, the systems to capture it have been expensive and inefficient.

That is changing. Over the last 30 years, researchers have watched as the price of capturing solar energy has dropped exponentially. There’s now frequent talk of a “Moore’s law” in solar energy. In computing, Moore’s law dictates that the number of components that can be placed on a chip doubles every 18 months. More practically speaking, the amount of computing power you can buy for a dollar has roughly doubled every 18 months, for decades. That’s the reason that the phone in your pocket has thousands of times as much memory and ten times as much processing power as a famed Cray 1 supercomputer, while weighing ounces compared to the Cray’s 10,000-pound bulk, fitting in your pocket rather than a large room, and costing tens or hundreds of dollars rather than tens of millions.

If similar dynamics worked in solar power technology, then we would eventually have the solar equivalent of an iPhone — incredibly cheap, mass distributed energy technology that was many times more effective than the giant and centralized technologies it was born from.

So is there such a phenomenon? The National Renewable Energy Laboratory of the U.S. Department of Energy has watched solar photovoltaic price trends since 1980. They’ve seen the price per Watt of solar modules (not counting installation) drop from $22 dollars in 1980 down to under$3 today.

Is this really an exponential curve? And is it continuing to drop at the same rate, or is it leveling off in recent years? To know if a process is exponential, we plot it on a log scale.

And indeed, it follows a nearly straight line on a log scale. Some years the price changes more than others. Averaged over 30 years, the trend is for an annual 7 percent reduction in the dollars per watt of solar photovoltaic cells. While in the earlier part of this decade prices flattened for a few years, the sharp decline in 2009 made up for that and put the price reduction back on track. Data from 2010 (not included above) shows at least a 30 percent further price reduction, putting solar prices ahead of this trend.

If we look at this another way, in terms of the amount of power we can get for $100, we see a continual rise on a log scale. What’s driving these changes? There are two factors. First, solar cell manufacturers are learning — much as computer chip manufacturers keep learning — how to reduce the cost to fabricate solar. Second, the efficiency of solar cells — the fraction of the sun’s energy that strikes them that they capture — is continually improving. In the lab, researchers have achieved solar efficiencies of as high as 41 percent, an unheard of efficiency 30 years ago. Inexpensive thin-film methods have achieved laboratory efficiencies as high as 20 percent, still twice as high as most of the solar systems in deployment today. What do these trends mean for the future? If the 7 percent decline in costs continues (and 2010 and 2011 both look likely to beat that number), then in 20 years the cost per watt of PV cells will be just over$0.50.

Indications are that the projections above are actually too conservative. First Solar corporation has announced internal production costs (though not consumer prices) of $0.75 per watt, and expects to hit$0.50 per watt in production cost in 2016. If they hit their estimates, they’ll be beating the trend above by a considerable margin.

What does the continual reduction in solar price per watt mean for electricity prices and carbon emissions? Historically, the cost of PV modules (what we’ve been using above) is about half the total installed cost of systems. The rest of the cost is installation. Fortunately, installation costs have also dropped at a similar pace to module costs. If we look at the price of electricity from solar systems in the U.S. and scale it for reductions in module cost, we get this:

The cost of solar, in the average location in the U.S., will cross the current average retail electricity price of $0.12 per kilowatt hour in around 2020, or 9 years from now. In fact, given that retail electricity prices are currently rising by a few percent per year, prices will probably cross earlier, around 2018 for the country as a whole, and as early as 2015 for the sunniest parts of America. 10 years later, in 2030, solar electricity is likely to cost half what coal electricity does today. Solar capacity is being built out at an exponential pace already. When the prices become so much more favorable than those of alternate energy sources, that pace will only accelerate. We should always be careful of extrapolating trends out, of course. Natural processes have limits. Phenomena that look exponential eventually level off or become linear at a certain point. Yet physicists and engineers in the solar world are optimistic about their roadmaps for the coming decade. The cheapest solar modules, not yet on the market, have manufacturing costs under$1 per watt, making them contenders — when they reach the market — for breaking the $0.12 per Kwh mark. The exponential trend in solar watts per dollar has been going on for at least 31 years now. If it continues for another 8-10, which looks extremely likely, we’ll have a power source which is as cheap as coal for electricity, with virtually no carbon emissions. If it continues for 20 years, which is also well within the realm of scientific and technical possibility, then we’ll have a green power source that is half the price of coal for electricity. That’s good news for the world. Photo: Evening sun by dingbat2005, on Flickr Sources and further reading: tags: , • great article and graphs. the rate of technology progress could be attributed to Kurtzweil as well. Using Gordon Moore implies that semiconductor line widths are involved but they aren’t. Manufacturing learning curve and market competition are significant contributors to price drops – past and present. • Jim Stogdill This deserves a second read, but the Moore’s law of solar, if there is one, only applies to the solar panel technology itself. As long as those panels have to sit on top of land the cost curve for solar power will asymptotically approach the cost of land and cannot continue to get cheaper ad infinitum. I would love to believe that declining solar costs will eventually cause us to walk away from coal mines with the coal still there. I guess we will eventually, but the question is really about when. When the oil rush hit Pennsylvania we didn’t stop killing sperm whales for quite a while. And oil didn’t need a Moore’s law, it was cheap almost immediately. • The real question we should be asking is, is a cheap, plentiful source of energy the solution to our socio-economic and environmental problems? What I’ve observed growing up in the US is as we expand availability we grow to absorb and exceed the new capacity. As an example, as our suburbs expanded, we experienced significant traffic congestion which we solved by expanding highway capacity. Oops, that didn’t solve the problem instead it caused an acceleration in suburban growth and sprawl. Cutting industrial emissions is only one factor in our growing problems and is definitely not a solution to the problem as the basic problem is socio-economic in nature. Technology, science, and engineering can at best mitigate the problem and temporarily relieve some of the pressures of human civilization but never solve them. • Alex Tolley Useful piece as far as it goes. The problem is that the$cost/watt is not helpful if the efficiencies are lower to get those low costs, e.g. organic PV. The lower the efficiencies, the greater area the arrays require, so fixed area sites, e.g. rooftops will not benefit from those lower costs. I also wouldn’t assume that installation costs will keep declining, this may only apply to large PV farms, not retrofitted building. At some point the auxiliary costs become relatively large, e.g. inverters, utility permits.

Having said that, the potential is clearly there to remake the energy economy, at least in sunny climes.

• Great piece. A corollary to this would be to document the historical dominance of steam power. Which we still rely on. The pressure to get away from this inefficient and old technology, indeed benjamin franklin would recognize all the but the nuclear reactors, is building.

Of course, one just can’t switch from the dominant product to the upstart. It will take years of efficiencies, step innovations, and competition that steam power experienced in the early years of the industrial revolution and made the names of the folks like Watt and Edison.

In the end, it will be fascinating to watch the world switch from steam based electricity production to…natural capture production?

• Doug

Is the cost of installation declining?
The cost of the panels may go to 0, but the install, startup and billing/metering is not on the same curve. Tell me how, and we can start a business together.

• MMcGarry

GE Energy announced their entry into solar PV market last week in a big way. This is exactly the type of competition this market needs to further drive innovation up and prices down. Combine that with increasing utility prices and we may reach the price crossover point sooner than later.

• MMcGarry

Doug the smart grid technology currently being deployed by utilities around the US and rest of the world will address the metering & billing concerns, but you make a valid point about installation cost. This is where we need additional innovation…not just innovation on the panels themselves.

• @Doug – I hear that the future is more in being off the grid. Meaning that individuals will buy and install their own units. Similar to installing a water heater or the like.

There seems to be no need for these installations to be massive and capital intensive. In fact, the loss experienced in electricity transmission (nearly 20%) and the need for storage on-site (what to do with all the wind power when created during night winds) will be a huge factor in pushing costs in favor of home installations.

• Solar power is getting more affordable all the time. Check out this story from DVICE about the largest solar array.

http://chimac.net/2010/06/12/abu-dhabi-plans-worlds-largest-solar-plant-dvice/

• Photonlust

Correct me if I am ignorant, but from what I’ve read from industry newsletters is that the problem for solar to make a shift towards mainstay power is not the output of solar but other factors. Some of these were mentioned (such as the axillary storage systems and distribution, as well as the locations themselves.) But some other details about solar energy on a wide scale haven’t been stated, and they often are not from environmentally focused people. Some of these include the rather limited service life of the panels themselves, which would need to be replaced (and are expensive) as well as the waste materials of dead panels. Solar Energy has a long way to go despite the actual output of improved panels. The panels themselves need to be revolutionized to either last longer or be readily recyclable or not present a contamination risk with lead and other harmful products. (Google ‘photovoltaic wastes’ for more about this.)

Ultimately not requiring sources of power other than what’s present is ideal of course, but charts like this are misleading in feeding the public an image towards assuming such a future of free power is closer than it appears. The truth is that there are just many other factors with solar than just the output itself being cost effective and improving. Suitable locations, setting up storage and distribution, (as were all mentioned) in addition to replacing the panels every 10-20 years and the waste management of the materials from decommission panels themselves.

There is a lot more to it before every apartment complex in L.A. has one of these on the rooftops. I particularly dislike the thought of individually owned panel systems like that in city areas anyway. Who would want to be the tenant to have to replace something like that, pay for the replacement AND for the disposal? Seems unfair… especially in conjunction with the likelihood of a utility fee anyway. This could easily turn into yet another sham by the electrical utility companies taking advantage of consumers. Not only would it be possible that they require to pay for some kind of service fees, but also the panel replacement themselves.

And is it a far-fetched thing to think that American utility companies will at some point try to push that kind of operation onto the public? What a business opportunity it would be.

• the_seeker_who

An area the size of Spain with solar panels could provide the world with enough electricity. The best solar technology is patented so unless you are willing to “Pay the Man” you can’t use it.

If you are interested in free energy take a look at Tesla’s free wireless electricity device that was halted by the person who was financing it J.P. Morgan, an energy tycoon that stated “If it is wireless, where do we put the meter?”
http://www.free-energy.ws/nikola-tesla.html

• I respect the creativity and engineering knowledge in the choice of the topic and the energy calculations but there’s a mistake in the calculation. The solar power is not stationary and therefore the collectors can not be assumed to provide regular energy as in the case of other sources of energy. All ocean surface needs to be considered as a part of the calculations, and also the solar energy is already being collected by the most efficient form of conversion called photosynthesis. This leaves the real challenge in using the Solar energy unanswered; how can we store, transport and regulate the energy production. You can’t also eat from the photosynthesis areas, which covers vegetated surface of the Earth. That leaves only areas like Sahara desert or inhabited areas, but we don’t know their role in say, rain formation in the rest of the World. Wind is much safer mass energy source than the Solar, since it requires less area/watt and also can be colocated with agricultural and habitable areas.

• digitect

Don’t forget battery technology. Solar isn’t useful 50% of the time unless you can store it. Until we are able to store solar energy cheaply and lightly, solar isn’t viable because we can’t haul it around in cars or use it to run the factory third shift.

• Please get over how much sinlight hits the upper atmosphere – or that you can get 1KW at sea level on a clear solar noon in africa.

Solar is thermodynamically “Low Quality” energy that does not scale because it takes square miles of land in sunny climes, new power lines, energy storage, and 100% backup power plants to provide power when it rains or at night, or in the morning in the winter, or in the afternoon in the winter. (low quality means low temperature equalent, not a pejoritive comment.) Solar is NOT a disruptive technology like microcircuits no matter what solar cells cost.

A home solar system in California costs \$30k+ and only pays back in 10 years if utilities lift the 5% cap on buyback at retail rates, eg., run you meter backwards at retail power rates. If utilities payback at wholsale rates it takes 100 years to payback a solar system.

Having said that it is critical to develop solar and all other forms of non-fossile fuel energy systems to offset oil and gas use partially. Conservation is critical also, fast reactors, and coal for which US has huge reserves. Natural gas is also in large supply.

Presenting an article like this with trivial comparisons to solar incident on earth is useless and misleading to developing a more sustainable energy commodity infrastructure.

Stop offering simplistic analysis without realistic engineering and economic analysis to back it up. That is a disservice to everyone, including the people who are trying to develop new energy systems.

• Thanks all for the comments. A few responses.

1) On the topic of installation costs:

Over the last 30 years, total installed cost has dropped at essentially the same rate as component cost. Installation costs per watt have dropped as competition has increased, as efficiency has decreased the amount of space and materials needed per watt, and as installation sizes have increased. It is true that those costs need to continue to drop for the overall cost of solar to keep dropping. As of now that looks possible for the next several years.

2) On the topic of solar panel lifetimes:

Cost projections frequently assume a 20 year lifetime of solar PV panels. The first generations of panels achieved this, and there’s no indication I’ve seen that current generations won’t.

3) On battery / storage technology:

Without innovation in solar energy storage, solar can replace 50-75% of coal (most power utilization is during the day on sunny days). To get the last 25-50%, it will be essential to get to lower cost, higher energy density storage systems. There’s a fair bit of innovation in this space as well, though it does not appear to be as rapid as the innovation in solar PV. Perhaps in a later post I can address that.

4) On the topic of the total amount of solar energy striking the Earth and its thermodynamic quality:

The reason to mention the amount of solar energy incident on the Earth is to clarify the amount of headroom of this energy source. Of all the energy sources we know of, only solar and nuclear have potential magnitudes substantially greater than current human energy consumption.

While solar energy is fairly sparse compared to fossil fuel energy, that does not rule it out as an energy source. Covering 1/1,000th of the planet with 20% efficient panels would net as much energy as all of human civilization uses today. While 1/1,000th of the planet is a significant area, it is only 1% the land are we use for agriculture. It is well within human capabilities to achieve this and far more.

In terms of photosynthesis, we have already demonstrated solar cells with efficiencies three times those of the highest photosynthesis is able to achieve. Photosynthesis is limited in its maximum efficiency by the need to convert solar energy into carbohydrates. Solar systems need convert solar energy into electricity and are not bound by the same constraints.

Ramez

• Simon Gaillard

Hello from France.
Whatever the cost, PV will not heat my house in winter; wood will. Less sexy, ok.

• Simon Gaillard

Hello from France.
Whatever the cost, PV will not heat my house in winter; wood will. Less sexy, ok.

• This is an interesting post. The graphs about solar energy are quite interesting, too. It gives hope that we may be able to stop buying oil from hostile and unfriendly regimes. Thanks!