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Source of Cost Reduction in Solar Photovoltaics

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  • Pillai, Unni
  • Cruz, Kyle

Abstract

The price of solar panels has fallen rapidly over the last few decades. Using an extensive dataset of prices, costs, output, sales and technical characteristics of firms in the solar industry during 2005-2011, this paper investigates the factors that have contributed to the decline in costs and prices. While previous studies have attributed learning-by-doing and static scale economics as the main drivers of cost reduction, we find that these do not have any significant effect on cost once four other factors are taken into account, namely, (i) reduction in the cost of a principal raw material, (ii) increasing presence of solar panel manufacturers from China, (iii) technological innovations, and (iv) increase in investment at the industry level. Together, these suggest that innovations in the upstream industries that supply the solar panel industry with raw materials and capital equipment have been important drivers of technological progress in the solar panel industry.

Suggested Citation

  • Pillai, Unni & Cruz, Kyle, 2013. "Source of Cost Reduction in Solar Photovoltaics," MPRA Paper 46657, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:46657
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    References listed on IDEAS

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    Cited by:

    1. Aldo Barrueto Guzmán & Rodrigo Barraza Vicencio & Jorge Alfredo Ardila-Rey & Eduardo Núñez Ahumada & Arturo González Araya & Gerardo Arancibia Moreno, 2018. "A Cost-Effective Methodology for Sizing Solar PV Systems for Existing Irrigation Facilities in Chile," Energies, MDPI, vol. 11(7), pages 1-18, July.

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    More about this item

    Keywords

    Solar; Photovoltaics; Technological Change; Learning;
    All these keywords.

    JEL classification:

    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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