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Massachusetts Institute of Technology (MIT), under the Solar Energy Evolution and Diffusion Studies (SEEDS) program, developed an overarching theory of technological innovation that captures the remarkable progress observed for photovoltaics (PV) over the past half century.


Photovoltaic technologies, including silicon and thin film solar cells, have experienced unprecedented cost reductions among electricity-conversion technologies. A number of micro- and macro-level explanations—ranging from constraints posed by fundamental materials properties to high-level theories of global economic productivity—suggest competing implications for how to sustain or accelerate the rate of cost decline. This project formalized a single framework to empirically decompose PV cost trajectories into a set of low- and high-level factors.


The project team compiled a large historical dataset of records for input and output costs, unit production and capacity, research expenditures, and material properties for numerous PV technologies. The dataset forms a basis for quantifying the relative importance of explanations for technological improvement, such as design features, the distance to theoretical efficiency limits, and input cost dynamics. Researchers formulated a cost equation that folds in each of the relevant hypotheses and applied the new theory to form practical guidelines for policymakers and solar researchers.


The team discovered that government policies to fund research and support market growth have played a critical role in the unprecedented cost reductions of PV technologies. Additionally, improvement in the efficiency of converting solar energy to electricity has been important, but so too has the steady improvement achieved on the manufacturing floor in private companies, leading to greater productivity and lower waste. Economies of scale achieved by larger manufacturing plants have also played a critical role. Looking forward, this research points to the importance of supporting PV modules constructed from plentiful materials in order to keep component costs low even as PV materials demand increases, as well as pursuing cost reduction in the non-module components of PV systems, or soft costs, which have significant room for improvement. Learn more in the study published by MIT.