What made Solar the King of Electricity Markets
Updated: Nov 24, 2020
After IEA's Energy Outlook 2020 claimed that solar is the new king of the world's electricity markets. I started researching to find out what has made such significant cost reductions in solar technology making Solar the king of electricity markets.
Especially, how much of that Solar technology cost reductions came from government funding for research, and how much came from government incentives to grow markets for this technology.
Answering this question led me to Prof. Jessika Trancik and her research group at MIT which is focused on evaluating the environmental impacts and costs of energy technologies. In their phenomenal research about explaining cost reductions in solar PV technology, They broke down the Solar PV technology into its basic cost components (such as materials, labour, and equipments) and also taken into account the effect of different mechanisms (such as device phsyics, manufacturing process, manufacturing scale) on these basic cost components by developing a mathematical model that was able to capture the effect of each of these mechanisms on the total cost of Solar PV technology.
Finally, they concluded that 30% of solar PV cost reductions came from government funding for research, and the rest 70% came from the government's favorable market expansion policies.
It is important because knowing why Solar technology has improved so fast and how to measure that technological progress could help us make better decisions about developing other promising clean energy technologies to accelerate the energy transition.