Why is solar energy cost declining?

Even after declining costs in solar energy resources, the usage is still a time-consuming process and it requires a heavy investment for smooth installation. Solar panel installation is a time-consuming and financially draining process. So what is the real story behind the declining costs in solar energy? Let us see if solar is really a viable option for energy production and whether the cost is worth it in the long run.

In the long-run, solar panels can help reduce carbon emissions into the environment and promote natural energy leading to a sustainable future. Earlier, solar energy usage was faster than production capacity. Even using solar power was a complicated process that took much longer than the conventional cooking methods at that time. With the help of technological development, solar energy usage is now a time-saving process.

In the previous blog, we discussed the solar energy trends in 2022. This month, team Solaristech will be exploring the facts behind the reasons for the decline in the solar energy costs.

Solar energy getting cheaper

Solar energy has gotten surprisingly cheaper than we could have ever imagined. Around 2010, solar energy was the most expensive energy source compared to fossil fuels and coal-mining projects. After the new developments in solar technology and infrastructure, solar energy cost has declined by 85% as of the records provided in 2020.

Story behind declining solar energy costs

PopSci says declining solar energy cost is due to learning curves and virtuous cycles. Learning curves and virtuous cycles refer to the savings, investments and exports supported by favourable demographics. The virtuous cycle in the solar energy industry refers to a sudden increase in solar energy demand in the Australian market. In just 10 years, solar energy costs have declined to 85% and this trend is not about to stop anytime soon. Earlier, extracting energy from the sun was a time-consuming and expensive process. The process could mainly be used for satellites. A decade ago, advanced solar technology was not yet developed to help homeowners and power plants manufacturers extract energy from the sun for daily human consumption.

The initial demand for satellites was known as a 'virtuous cycle'. An increase in the demand for solar panels for satellites resulted in a sharp decline in the solar panel cost. Declining solar energy costs helped the businesses to use the solar energy for more niche purposes like fulfilling businesses manufacturing needs, paving the path towards economic viability for the future.

With time, technology improved, resulting in the declining price of solar energy. Technological advancements and the economies of scale made solar power a viable general-purpose energy source.

Another reason behind the cheaper rates is that the source of this energy - the sun - is free. Sunshine and wind do not require any investment to be made for installations. They are free and therefore, businesses are opting for solar energy resources instead of fossil fuels. Power plants have to buy mined fuels to operate, which resulted in about 40% of the company's total expenses. To have a smart approach for business operations, companies started to use solar and wind energy for general electricity purposes. Using solar power saved the company’s expenses for further business development. The shift towards solar and wind energy resources increased rapidly, resulting in declining solar installation costs.

Delay in green transition?

Even after the decline in solar energy costs, dependency on fossil fuels has not been eliminated. Investments, policies, and the industry's infrastructure favour fossil fuels. Energy economist Ashley Langer stated that even though renewable energy sources are free and cheaper to build when thinking of a new plant, the metrics do not apply to existing fossil fuels. As a result, there is a delay in the green transition. Sometimes, the regulatory structure of utilities is more profitable to keep a coal or natural gas plant running. The investor-owned utilities guaranteed a rate of return on investments and continued earnings to run the plants.

Conclusion

At the start of the blog, we promised to provide you with the real reason behind the declining costs in solar energy sources and here it is. Technological advancement and rise in the economies of scale resulted in a decline in solar energy resources.

We are always here to help you with any guidance regarding solar panel installation and tips on using solar energy. Contact us or visit https://solaristech.com.au/ for expert guidance about solar PV installation.