How solar energy got so cheap

1953 is the Year...

The US purchases this from Bell Labs...

the first commercial silicon solar cell.

But these first solar cells are not exactly efficient.

If you were to put them on your roof

and try to generate electricity

it would cost you about $300,000 a month.

Fast forward 70 years and that cost has come down.

Way down.

Solar energy is the cheapest it's ever been...

nearly 90% cheaper than it was just in 2009.

In a lot of places

it is now cheaper to generate electricity with solar...

than with coal, natural gas, or nuclear power.

This is an unqualified success story.

And if we can take the right lessons from it...

this story can help us create and deploy

all the other technology we will need

to keep our planet livable.

They just became cheap so quickly.

It's really an amazing breakthrough

that is going to come to define the 21st century.

So how did solar energy go from prohibitively expensive

to cheaper than fossil fuels?

“We're in an energy crisis now.”

In the 1970s, with the oil crisis

there was a really big push

on research and development for alternative energy.

“Today, in directly harnessing the power of the sun

we're taking the energy that God gave us...

and using it to replace our dwindling supplies of fossil fuels.”

With Project Independece, as it was called...

the US federal government allotted more than $8 billion

to solar research and development.

That really made a huge difference

and probably doubled the efficiency of the cells.

It was a guy named Paul Maycock who came from Texas Instruments.

—Oh, like the calculators? —Yeah!

Working on calculators, and he found for calculators...

the more they built, the cheaper the calculators got.

And he said, same thing for solar.

If we build more, the cost will come down.

But before the US could really test Maycock’s idea

President Reagan canceled Project Independence.

Fortunately, two countries were ready to step in

and put Maycock’s hypothesis to the test.

Like the US, Japan had been hit hard

by the oil crisis in the 70s.

They started funding solar research and development

around the same time

and soon they developed solar cells small and powerful enough

to run watches, calculators, and toys.

Trivial, in terms of the global energy system...

but crucial in that large companies were now becoming interested

in solar and crucially, figuring out how to construct solar...

at really low, low cost.

That knowhow came in handy when the Japanese government

announced a major subsidy for rooftop solar in the mid-90s.

But the global market for solar technology

was still relatively small.

Until Germany stepped in and truly changed the game.

The most important policy

on this whole chain, if I had to pick one

it would be the German feed-in tariff.

Feed-in tarriffs.

Which was basically a program that deployed solar at scale.

Here's how it worked.

Starting in 2000, the German government

basically said to power companies...

Hey, if you can start producing renewable energy

we will buy it from you.

We promise for double the market price

and we will keep paying you at that rate for the next 20 years.

And so for developers of solar projects in Germany, all of a sudden...

it became like a no-brainer to do this.

Even though Germany is not the sunniest place in the world.

Companies responded to the incentives by building

solar farms like this one.

In one year, the installations for solar

went up by a factor of 4 and then it just grew.

The more panels they produced, the cheaper it got

to generate electricity with solar.

Then another country picked up the baton...

and made solar cheaper than even Maycock could have imagined.

So it really starts with

Deng Xiaoping in the 1980s

and had this plan for a thousand Chinese students to go abroad

and come back and see what they came back with.

One group of students went to the University of New South Wales

in Australia, where they worked with a team

that was producing some of the most efficient

solar cells in the world.

After a few years, one of those students went back to China...

and opened up the country's first commercial solar manufacturer

Suntech in 2002.

With that new German law in place

the company had so much success selling solar panels to Germany...

Suntech success attracted competitors...

which helped drive down prices

in part because all of this demand inspired Chinese manufacturers

to produce at an unprecedented scale.

Policymakers around the world

noticed the falling prices and wrote laws to create new markets

in their countries, including the United States.

The United States passed an important law.

It's called the Energy Policy Act 2005.

And buried deep within that law

was an investment tax credit.

Sounds kind of boring, but it turns out

it was absolutely critical to deploying solar...

because what it said was that

if you put out a new solar project...

you can get 30% of those costs back for a tax credit.

This sparked a phenomenon called solar leasing...

where companies would look for places to put solar

so that they could reduce the amount

they owed the federal government in taxes.

Other policies helped create markets for solar modules

in Spain, Italy and crucially, in China.

The Chinese devised their own subsidy program

that was modeled on the German one

where you get a guaranteed price.

By 2011, China was not only the biggest producer of solar...

but the biggest producer of solar electricity.

In the course of a single lifetime

solar energy has transformed from a niche technology

to the cheapest way to bring clean, reliable power

to billions of people around the world.

But the markets that brought us these lower prices

didn't just magically appear by some invisible hand.

Political leaders in countries all over the world

created these markets, then subsidized them

for decades to the tune of billions of dollars.

By investing that money

you got the solar to come down in costs

to the point where you don't need to subsidize it anymore.

We're doing that on purpose

with things like batteries and electric vehicles.

We're doing that with things like heat pumps.

Solar provided us with a playbook

for how to do that for other technologies.