The cost of solar energy continues its dramatic descent, solidifying its position as the world’s most affordable power source. New data and industry reports confirm a trend of falling prices, driven by technological advancements, increased manufacturing scale, and evolving market dynamics. This shift is not merely a matter of cost savings; it’s a fundamental restructuring of the energy landscape with significant implications for utilities, consumers, and global climate goals.
Solar Costs Hit Record Lows
The median cost of installing a residential solar panel system in the United States reached an all-time low of $2.50 per watt in 2024, according to a report by EnergySage. This represents a more than 33% decline over the past decade, from a median price of $3.75 per watt in 2014. For a median-sized system of 11.5 kilowatts, the total cost before incentives was $28,750. This price reduction is particularly notable given recent increases in interest rates and relatively stable residential electricity prices, suggesting installers are actively seeking to stimulate demand through more competitive pricing.
A significant contributor to these lower costs is the plummeting price of residential solar panels themselves, which fell by 30% in 2024 compared to the previous year, as reported by Wood Mackenzie. The falling cost of lithium-ion batteries, crucial for storing renewable energy, is also playing a key role. Battery storage costs dropped by a third in 2024 to $104 per megawatt-hour, driven in part by oversupply related to slower electric vehicle sales. This makes combined solar-plus-storage systems increasingly attractive to homeowners and businesses.
Global Trends and Technological Advancements
The decline in solar costs isn’t limited to the United States. The International Renewable Energy Agency (IRENA) reports that between 2010 and 2023, the global weighted average levelized cost of energy of concentrating solar power (CSP) fell from $0.39 per kilowatt-hour (kWh) to under $0.12/kWh – a 70% reduction. This decline is attributed to cost reductions across all components of a CSP system, leading to a 58% decrease in capital expenditure (CAPEX) for parabolic trough plants and a 68% decrease for power tower plants over the same period.
Innovations in Concentrating Solar Power (CSP) are also expanding the potential of solar energy. Several projects are now underway to provide 100-hour+ energy storage, addressing a key challenge of intermittent renewable sources. This extended storage capability enhances the reliability and dispatchability of solar power, making it a more viable alternative to traditional fossil fuel-based generation.
U.S. Deployment and Market Shifts
The U.S. Photovoltaic (PV) market is experiencing substantial growth. The International Energy Agency projects significant expansion in 2024, building on the record-breaking year of 2023. Over the next two years, virtually all new electric generation capacity in the U.S. Is expected to come from PV, batteries, and wind power. In the first half of 2024 alone, the United States installed approximately 14.1 gigawatt-hours (4.3 GWac) of energy storage onto the electric grid – the largest first-half total on record.
Thin-film PV technology is gaining traction in the U.S., accounting for more than 17% of PV deployments between 2015 and 2023, and 24% of utility-scale deployments. This represents a notable increase compared to its global share of around 3% over the same period, suggesting a preference for this technology within the U.S. Market. Approximately 45% of battery capacity and 26% of utility-scale PV capacity were integrated into hybrid PV/battery energy storage system projects in 2023, a trend that has remained relatively consistent in recent years.
Implications for the Energy Sector
The continued decline in solar costs presents both opportunities and challenges for the energy sector. Traditional utilities face increasing pressure to adapt to a decentralized energy landscape where distributed generation, such as rooftop solar, is becoming increasingly prevalent. The rise of solar-plus-storage systems empowers consumers to reduce their reliance on the grid, potentially impacting utility revenue models.
However, utilities also have opportunities to participate in the growth of the solar market through investments in grid modernization, energy storage solutions, and the development of new business models that integrate renewable energy sources. The Department of Energy’s Quarterly Solar Industry Update provides ongoing analysis of these trends and updates on U.S. Government programs designed to support the solar industry.
The falling cost of solar energy is not simply a technological achievement; it’s a catalyst for broader economic and environmental change. As solar becomes increasingly competitive with fossil fuels, it will play a critical role in decarbonizing the energy sector and mitigating the impacts of climate change. The continued innovation and cost reductions in solar technology suggest that this trend will continue, further accelerating the transition to a cleaner, more sustainable energy future.
