How Solar Energy Became Cheap

Today, we’re fortunate to present a guest contribution written by Greg Nemet, Professor at the University of Wisconsin–Madison in the La Follette School of Public Affairs and the Nelson Institute’s Center for Sustainability and the Global Environment. He has also been a contributor to the Intergovernmental Panel on Climate Change and the Global Energy Assessment

I have a book coming out on June 10, “How Solar Energy Became Cheap: A Model for Low-Carbon Innovation.”I’ve summarized the findings at howsolargotcheap.com and it’s available on Amazon.

When I began working on solar energy in 2002, the technology was seen as an intriguing novelty, serving a niche, but widely dismissed as a serious answer to social problems associated with energy use. Since then solar photovoltaics (PV) has become a substantial global industry—a truly disruptive technology that has generated trade disputes among superpowers, threatened the solvency of large energy companies, and prompted serious reconsideration of electric utility regulation rooted in the 1930s. More favorably, its continually falling costs and rapid adoption are improving air quality and facilitating climate change mitigation. PV provides some of the lowest cost electricity in the world and prices in 2019 are now below where even the most optimistic experts expected they would be in 2030.The costs of solar PV modules have fallen by more than a factor of 10,000 since they were first commercialized in 1957 and in sunny places solar electricity is now cheaper than any other form of electricity.It may be the cheapest way that humans have ever been able to produce electricity at scale.

My motivation for spending the time researching this book was that despite years of work looking at solar costs, we still don’t have a dispositive answer to the question behind the book’s title.The quantitative work has helped identify factors such as economies of scale and learning by doing.However, I developed the impression that these analyses were omitting important variables—such as international flows of knowledge.The concept of National Innovation Systems provides a theoretical structure for this assessment and emphasizes that we should expect distinct national contributions to emerge from this international system, rather than thinking of it as a homogenous global knowledge stock.The plan was to take a mixed methods approach, complementing data collection with expert knowledge, which led me to conduct interviews with 75 people in 18 countries.I anticipate that causal factors revealed in interviews are good future candidates to be operationalized into quantitative variables, and that can be enabled through the proliferation of quality international data and creative approaches to econometric identification.

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