When most people think of “solar power,” they think about one of two things – vast arrays of solar collectors laid out in hot deserts (the left-hand panel below) or smaller arrays on rooftops or highways (the right-hand panel below). This is perhaps the most ubiquitous method of converting solar energy into electricity, but it is not the only method. These arrays of solar collectors are known as “solar photovoltaic” installations or Solar PV for short.

Solar PV installations consist of individual collectors called cells, which are packaged together in bundled modules. An individual cell does not generate enough electricity to power much of anything, which is why they must be bundled together. A single module might be enough to provide electricity for a single parking meter or roadside telephone. A number of modules can be further bundled together to form an array (see below). Multiple arrays might be needed to provide electricity for a building or a house.

There are many different kinds of solar PV cells in existence (and even more being developed in research laboratories), but they all work in more or less the same way. Unlike virtually any other type of power plant (be it coal, natural gas or wind), there is no turbine in a Solar PV cell. In fact, there are basically no moving parts at all. .

Solar PV cells harvest solar energy through a phenomenon called the photovoltaic effect, discovered in 1839 by the French physicist Bequerel. Photons of solar energy interact with electrons to “excite” them, causing them to move through conductors, thus producing an electric current. The first solar PV module was made at Bell Labs in the 1950s, but was too expensive to be more than a curiosity; in the 1960’s NASA started to use PV modules in spacecraft and by the 1970s, people started to explore their use in a wider range of terrestrial applications.

This following video explains a bit more about how Solar PV cells work and describes the different Solar PV technologies in use today. One of the potentially most important evolutions in Solar PV technology is the use of semiconducting materials other than silicon in Solar PV cells. These materials are of interest because they could, in concept, allow more of the sun’s energy to be captured on a single array. But they face barriers in the form of high costs and, in some cases, questions about the availability of raw materials.

Video: Photovoltics, a Diverse Technology (4:26)

Most modern Solar PV technologies are relatively inefficient compared to other forms of electricity generation. Remember here that “efficiency” refers to how much of the fuel that is injected into an electricity generation system is actually converted into useful electricity, versus being rejected as waste heat or otherwise escaping from the generation system. While modern coal-fired and gas-fired power plants can have efficiencies as high as 60% (or sometimes even higher), most Solar PV cells convert sunlight to electricity with an efficiency of 20% or less (see below), though this number has been rising over time.

Whether the efficiency of Solar PV cells is all that important is a matter of some debate. On the one hand, higher-efficiency cells would require less land or space to produce a given amount of electricity. Land use (or the number of rooftops) can be a significant limiting factor in the deployment of Solar PV. On the other hand, fuel from the sun is free and there is no scarcity of sunlight, so whether Solar PV cells can achieve 30% efficiency versus 20% efficiency may not be such a big deal, and may not be worth the extra economic cost to produce such high-efficiency cells.

If you have ever left a cold drink out in the sun during the summertime (or if you have children, if you have ever left water in the kiddie pool out in the sun for a long time), you would notice that the formerly cold water gets warm – maybe even hot. If it happens to be summertime where you are living right now, try it! Whether you realize it or not, this little science experiment is the basis for a second way of harnessing the sun’s energy to produce electricity, called “concentrated solar power” or CSP. (This technology is also sometimes called “solar thermal.”)

The following video explains how CSP works. The basic idea is that a collection of mirrors reflects the sun’s light (and heat) onto a large vessel of water or some other fluid in a metal container. With enough mirrors reflecting all of that sunlight, the fluid in the metal container will get hot enough to turn water into steam. The steam is then used to power a turbine just like in almost any other power plant technology

In addition to being free as a source of energy (it does cost money to harness it and turn it into electricity), energy from the sun is practically limitless. The surface of the Earth receives solar energy at an average of 343 W/m². If we multiply this times the surface area of the Earth, about 5x10¹⁴ m², we get 1715x10¹⁴ W. But, 30% of this is reflected, and only 30% of the Earth is above sea level, so the usable solar energy we receive on the land surface is about 360x10¹⁴ W. We need to reduce this further because not all of the land surface is suited to installation of solar PV panels — we don't want to cut down forests, and ice-covered areas are not suitable, so we reduce the area by about one half. Over the course of a year, this amount of solar energy adds up to 66x10²² Joules. In 2018, we used about 600x10¹⁸ Joules of energy, which is just a shade less than 0.1% of the harvestable solar energy we receive on the land. This means that even if we got all of our energy from the Sun, we would not make a dent in the total! The potential is vast — 10,000 times what we need!

Let’s consider what it would mean for us to get all of our energy from Solar PV — how much of the Earth’s surface would we need to cover with panels? The black dots (radii of 100 km) in the figure below represent areas that could generate enough energy from sunlight to completely power the planet for an entire year. Practically, there are barriers to running the planet entirely on sunlight (everything would need to be electrified, we would need very large quantities of battery energy storage, and so forth), but the dots are useful as a demonstration of just how vast the energy production potential from solar is.

One of the important differences between Solar PV and CSP is that CSP requires more intense sunlight, and as such, it is not a viable option in many places. In contrast, Solar PV works just about everywhere — it is more versatile. Another important difference is in scale — CSP is really suited to utility-scale power plants, whereas Solar PV works at both the utility-scale and the very small scale.

The map below shows the PV potential for the world. The variability in the map is mainly a function of cloudiness and latitude. Many of the big, utility-scale solar PV plants are located in the red areas, but there is a surprising amount of Solar PV energy being harvested in places like Germany and Japan, both of which are fairly cloudy. But, even in a fairly cloudy place like Pennsylvania, you can see from the map that we could expect about 1460 kWh per year from a 1 kW PV array. From this, you can calculate how many square meters of PV panels you’d need to provide the electricity for a house that uses the typical 10,800 kWh per year. If you divide 10,800 kWh by 1460, you see that you’d need about 7kW of solar panels, which would fit on a typical house roof. The main point here is that Solar PV is a viable energy source in most parts of the world where people are living. In contrast to Solar PV, energy from CSP is only viable in places where the daily totals in the map above are higher than 6 kWh/day. Nevertheless, there are many regions where CSP viability and human population coincide, so it too can be an important energy resource in the future.

The generation of solar energy – primarily through Solar PV – is a story of exponential growth. Since 2000, the global Solar PV industry has grown by around 25% per year on average, so installed capacity has been doubling every 2.7 years (see below). Even so, solar represents a very small sliver of total global power generation — for now.

This shows the history of global solar energy generation in Exajoules (EJ) of energy each year (1 EJ = 10¹⁸J). This growth history is following an exponential curve. In 2018, this represents a small fraction of global energy consumption, which is almost 600 EJ.

Click for a text description of the Global Solar Energy Generation History graph.

The image is a line graph illustrating the historical trend of global solar energy generation from 1985 to 2020. The x-axis represents the years, marked from 1985 to 2020, while the y-axis indicates the energy generated per year in exajoules (EJ), ranging from 0 to 6. The graph depicts a sharp upward trend starting around 2005, indicating significant increases in solar energy production. The blue line that represents the data forms a steep curve upward after 2010, emphasizing rapid growth. A text box on the graph annotates that the average growth rate is 25% per year. The title of the graph is "Global Solar Energy Generation History."

Source: David Bice, data from BP Statistical Review of Energy, 2018

The nice thing about exponential growth is that it is easy to project it into the future. Over the time period shown in the graph above, solar energy generation has grown by 25% per year; if we continue that into the future, we find that before long, we would have enough solar energy to make up a substantial portion of the global energy needs by 2030 (see figure below). By the year 2040, this growth would rise to 1360 EJ, more than twice the global energy consumption of the present. Of course, that makes no sense — we would not produce more energy than we need, and this reminds us of an important fact, which is that exponential growth cannot continue forever.

This shows the history of global solar energy generation in Exajoules (EJ) of energy each year (1 EJ = 10¹⁸J). This growth history is following an exponential curve. In 2018, this represents a small fraction of global energy consumption, which is almost 600 EJ.

Click for a text description of the Global Solar Energy Generation Projection graph.

The image is a line graph titled "Global Solar Energy Generation Projection," depicting projected solar energy generation from 1985 to 2030. The x-axis represents the year, ranging from 1985 to 2030, and the y-axis represents the energy generated per year in exajoules (EJ), ranging from 0 to 120. The graph starts with a nearly flat blue line from 1985 to around 2015, indicating little to no growth in solar energy production. After 2015, the line turns orange and begins to curve sharply upward, showing a significant increase, projecting exponential growth in solar energy generation up to 2030. A text box within the graph notes "Projection into the future assuming 25% per year growth."

Source: David Bice, data from BP Statistical Review of Energy, 2018

One reason to trust this projected future growth is that the price of solar energy has fallen dramatically over time as can be seen in the graph below. In fact, if the generation of solar PV energy has been growing exponentially, the price has been dropping exponentially.

The price history of solar PV cells in $/watt shows an incredible decline in price. This is due to technological advances and the economy of scale as more and more PV cells are manufactured.

Click for a text description of the graph: Price History of Silicon PV Cells.

This bar chart illustrates the decline in the cost of silicon photovoltaic (PV) cells from 1977 to 2015, measured in US dollars per watt ($/Watt).

Key Observations:

1977:

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  • The price of silicon PV cells was $76.00 per watt, the highest recorded in the dataset.
  • Marked by a tall blue bar at the far left.

1980s:

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  • Significant price reduction as PV technology improved.
  • By 1985, the price dropped to around $10 per watt.
  • The bars become progressively shorter, showing a steep decline.

1990s:

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  • The price stabilized around $5–10 per watt.
  • The bars maintain similar heights, indicating slower reductions.

2000s:

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  • Continued gradual decline, reaching around $2 per watt by mid-2000s.
  • More efficient manufacturing and increased adoption contributed to lower costs.

2015:

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  • The price reached $0.30 per watt, as indicated by a highlighted blue label at the bottom right.
  • This marks a 99.6% reduction from 1977 prices.

Additional Details:

• A text box in the center of the graph reads:
  “Price history of silicon PV cells in US$ per watt”
• Data Source: Bloomberg New Energy Finance & pv.energytrend.com
• The trend follows Swanson’s Law, which states that solar PV prices drop by 20% for every doubling of cumulative shipped volume.

Source: Price history of silicon PV cells since 1977 by Rfassbind from Wikimedia Commons

The price decrease is following a pattern that has been given a name: Swanson’s Law, which states that the price drops by about 20% for each doubling in the number of PV cells produced. This law suggests that the prices of solar PV energy will continue to decline in the future.

This brings us to an important question — how does the cost of solar energy compare to other sources of energy? Energy economists have come up with a good way of comparing these costs by adding up all of the costs related to producing energy at some utility-scale power plant (a big wind farm, a big solar PV array, a CSP plant, a nuclear plant, a gas or coal-burning power plant). This is called the levelized cost of energy, and you get it by taking the sum of construction costs, operation and maintenance costs, and fuel costs over the lifetime of a plant and then dividing that by the sum of all the energy produced by the plant over its lifetime. This cost provides us with a way of comparing the energy from different sources. Since the boom in natural gas production due to fracking, natural gas has been the lowest cost form of energy (which is why coal is being used less and less), but energy from solar and wind have been decreasing rapidly, as can be seen in the following graph. When a renewable electrical energy resource such as solar or wind becomes equal in cost to the cheapest fossil fuel source of electricity, we say that the renewable resource has reached "grid parity". Once grid parity is achieved, the renewable resource makes sense from a purely economic standpoint, and as it drops below the grid parity point, it is the smartest electrical energy resource.

The levelized cost of solar energy in the US has been dropping fast in recent years and has been slightly cheaper than electrical energy from natural gas since 2015. The point in time where the two are equal is when solar energy achieved what is called grid parity. Wind energy reached grid parity by 2012, so at this point in time, both of these renewable sources provide cheaper energy than the cheapest fossil fuel source.

Click for a text description of the graph: Levelized Costs of Solar, Wind, and Natural Gas (2008–2018).

This line graph displays the levelized cost of energy (LCOE) for solar, wind, and natural gas from 2008 to 2018 in 2018 dollars per megawatt-hour (MWh). The LCOE represents the total cost of generating electricity from each source, considering installation, maintenance, and fuel costs.

Key Observations:

Solar Energy (Red Line)

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  • In 2008, the LCOE for solar was about $180 per MWh, the highest of the three energy sources.
  • The cost declined rapidly over the years, reaching approximately $40 per MWh by 2016.
  • By 2018, solar became the cheapest energy source at under $30 per MWh.
  • The decline reflects advances in solar panel technology, manufacturing efficiency, and increased adoption.

Wind Energy (Green Line)

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  • The cost of wind energy fluctuated between $60–80 per MWh from 2008 to 2010.
  • After 2010, wind costs began to decline, reaching a low of about $20 per MWh in 2018.
  • The drop can be attributed to larger and more efficient wind turbines, better grid integration, and falling installation costs.

Natural Gas (Blue Line)

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  • The LCOE for natural gas remained relatively stable, fluctuating between $40-60 per MWh over the period.
  • Natural gas was cheaper than solar for most of the timeline but was surpassed by both solar and wind by 2018.
  • The stability of natural gas prices is due to fuel costs, infrastructure maintenance, and policy factors.

Overall Trends:

• Solar energy saw the most dramatic cost reduction, making it one of the cheapest electricity sources by 2018.
• Wind energy also experienced a significant drop, becoming the least expensive energy source by 2018.
• Natural gas remained relatively stable, but was no longer the most cost-effective option by the end of the period.

Source: David Bice, data from Lawrence Berkeley Labs.

Part of the reason that solar and wind have expanded in recent years has to do with government policies — a number of countries have instituted subsidy and incentive programs that offset a large portion of the construction/installation costs of solar and wind technologies or devise rules that otherwise give advantages to electricity generation from renewables. Subsidies enacted in various countries have included feed-in tariffs (which guarantee an above-market sales price for solar power); rebates (which directly offset capital and installation costs); and favorable tax treatment (which is like an indirect feed-in tariff). Germany has one of the world’s largest Solar PV markets not because it has the best solar resource on earth but because it has been willing to support a generous feed-in tariff on solar power. (For many years the tariff was over 30 cents per kilowatt-hour, or more than five times the average power price in the United States; in recent years the tariff has been reduced.) These government policies have effectively stimulated the growth of these renewable energy resources, which has, in turn, resulted in lower prices.