Solar panels cost much less today than decades ago. A study explains the industries and innovations that led to this large drop in price.
Solar panel costs have dropped by more than 99% since the 1970s, according to a new MIT study that identifies the innovations responsible for this change. The research shows that progress came not just from within the solar industry but from a network of other sectors, including semiconductors, metallurgy, glass production, construction, oil and gas, and even legal processes.
The findings could help renewable energy companies direct R&D toward the most effective cost-reduction strategies and guide policymakers on measures that accelerate adoption. While photovoltaic (PV) modules benefit from mass production, balance-of-system (BOS) components—such as mounting systems, inverters, and wiring—often rely on local innovations, including software for permitting and utility processes. BOS costs have historically fallen more slowly, but advances in automation, computing, and AI could accelerate their decline.
The study identified 81 unique innovations since 1970, ranging from antireflective glass coatings to online permitting systems. Many PV innovations originated from research organizations and industry, while governments and professional associations drove much of the BOS progress. Breakthroughs like wire sawing in the 1980s alone cut system costs by an estimated $5 per watt by reducing silicon waste and boosting manufacturing speed.
The research combined a quantitative cost model with a qualitative review of advances in PV materials, manufacturing steps, and deployment methods. Innovations were grouped into patterns—some improving materials, others enabling prefabrication for faster installation. Industry origins and timelines were mapped, and domain experts identified the most influential changes.
The work builds on earlier models that measured how engineering improvements affected PV prices, adding a deeper look at the scientific and industrial pathways involved. It concludes that solar technology has thrived because it could absorb advances from other industries, thanks to technical compatibility, favorable timing, and supportive policies.
The approach can be applied to other renewable energy systems, with future research planned to assess the role of “soft” technologies like permitting and utility coordination in driving cost reductions.
