At a Glance
- An MIT study analyzed five decades of solar power data to identify the specific innovations that caused a greater than 99% drop in photovoltaic system costs.
- Researchers developed a hybrid quantitative-qualitative framework, utilizing a cost model to guide their search for technological advances in scientific literature and industry reports, thereby connecting innovations to cost changes.
- Innovations in solar modules were heavily influenced by the semiconductor industry, which provided advancements in manufacturing tools and processes that improved the quality and efficiency of materials.
- Balance-of-system costs declined due to component design changes, integration, automation, and standardization, as well as “soft technology” innovations such as fast-track digital permitting, which reduced installation delays.
- The findings underscore the importance of knowledge spillovers from various industries in driving technological progress and inform strategic R&D investment decisions in other renewable energy technologies.
The cost of solar panels has plummeted by over 99% since the 1970s, making solar power a mainstream energy source. A new study from the Massachusetts Institute of Technology, published in the journal PLOS ONE, provides the most detailed account yet of how this dramatic price drop happened. Researchers found that the success of photovoltaic, or PV, systems was not due to a single breakthrough, but rather a complex web of innovations drawn from a surprisingly diverse range of industries, including semiconductor manufacturing, construction, and even law.
To uncover these connections, the MIT team developed a unique hybrid framework. They began with a quantitative cost model, which utilizes mathematical equations to demonstrate how factors such as material usage and manufacturing efficiency impact the final price of a solar energy system. This model served as a map, guiding a deep qualitative analysis of scientific literature, patents, and industry reports to pinpoint the specific inventions that improved each factor. This approach enabled the researchers to link abstract cost drivers to tangible, real-world improvements.
The study revealed a key difference between innovations affecting solar modules—the panels themselves—and those impacting the “balance-of-system” (BOS), which includes all other components, such as wiring, mounting racks, and inverters. Module costs fell mainly due to improvements in manufacturing tools and material quality, many of which were borrowed from the ever-advancing semiconductor industry. In contrast, BOS costs were reduced through clever design changes, component integration, automation, and standardization, with some improvements even coming from software that streamlined the complex permitting process.
These findings underscore the critical role of “knowledge spillovers,” where advancements in one field benefit another. The research shows that the solar industry was well-positioned to absorb innovations from many adjacent sectors. This historical analysis provides a valuable blueprint for policymakers and companies, helping them identify which areas of research and development to prioritize to continue driving down the cost of renewable energy and accelerate the transition to a clean-energy future.
References
- Kavlak, G., Klemun, M. M., Kamat, A. S., Smith, B. L., Margolis, R. M., & Trancik, J. E. (2025). Nature of innovations affecting photovoltaic system costs. PLOS One, 20(8), e0320676. https://doi.org/10.1371/journal.pone.0320676
- Massachusetts Institute of Technology. (2025, August 11). Surprisingly diverse innovations can lead to dramatically cheaper solar panels. Tech Xplore; Massachusetts Institute of Technology. https://techxplore.com/news/2025-08-diverse-cheaper-solar-panels.html
