How Cheap Will Solar Be In 2030?

The cost of solar panels has declined dramatically over the past few decades. Since 2010 alone, the average cost of residential solar panels in the U.S. has fallen by over 50%, from around $8/watt to under $4/watt in 2020 (1). As more solar has been deployed globally, manufacturing has scaled up and efficiencies have improved, bringing down costs. Many experts predict that solar will continue to get cheaper in the coming years.

The purpose of this article is to look at expert projections for how inexpensive solar power will become by the year 2030. Given the rate of decline in the past, it’s expected that solar will reach new cost lows in the next decade, making it ever more competitive with conventional energy sources.

(1) https://www.seia.org/solar-industry-research-data

Table of Contents

Factors Driving Down Solar Costs

There are several key factors that have contributed to the steep drop in solar costs over the past few decades:

Experience curve and economies of scale. As the solar industry has scaled up, manufacturers have reduced costs through experience and automation. Producing at ever-larger scales has also reduced component costs through bulk discounts on materials (MIT, 2018).

Improved solar panel efficiency. Advances in solar cell technology and manufacturing have steadily increased the efficiency of solar modules, meaning more electricity can be produced from the same sized panel (Arka360, 2023).

Cheaper raw materials and manufacturing innovations. New production techniques and the commodification of key materials like silicon have cut manufacturing expenses (CleanTechnica, 2022).

Reduced soft costs. Installation labor, permitting, and other soft costs have decreased as solar adoption has expanded and processes have been streamlined (MIT, 2018).

Projected Cost Declines

There are a wide range of projections for how much solar costs will decline by 2030 from government agencies, industry groups, and academics. According to the U.S. Department of Energy’s 2030 Solar Cost Targets, the DOE is aiming for solar to reach 4¢/kWh for commercial solar, 5¢/kWh for residential solar, and 5¢/kWh for utility-scale solar by 2030. The DOE’s SunShot 2030 report notes that for solar to reach these aggressive cost targets, costs will need to drop by an additional 40-50% between 2020 and 2030.

According to projections by the National Renewable Energy Laboratory (NREL), utility-scale solar costs could decline to 2.8-4.6¢/kWh by 2030, a drop of 60-70% from 2020 costs. Wood Mackenzie, an energy research and consultancy group, sees utility-scale solar hitting 4.4¢/kWh by 2030 in their modeling. The International Renewable Energy Agency (IRENA) projects utility-scale solar in the best locations could reach 1.6¢/kWh by 2030.

For residential rooftop solar, projections for 2030 costs range from 4-7¢/kWh, or 50-70% lower than 2020 costs according to analyses by NREL, Wood Mackenzie, and RMI. This wide range reflects uncertainties around module efficiency improvements, soft costs like permitting and installation, and the growth of floating solar and solar+storage.

Rooftop Residential Solar

According to the National Renewable Energy Laboratory’s report “Case Study and Cost Modeling for Solar and Storage in 2030,” the projected installed cost for typical residential rooftop solar PV systems is forecasted to decline substantially by 2030.

Residential rooftop solar costs are expected to drop from around $3.00 per watt in 2020 to $1.20-1.50 per watt in 2030, as module prices continue falling and soft costs like permitting and installation labor improve. This will make the levelized cost of energy from residential solar PV systems as low as 5-7 cents per kilowatt-hour in most U.S. locations by 2030, according to the DOE’s 2030 solar cost targets.

For homeowners looking to go solar, this means much lower costs to purchase rooftop systems outright in 2030 compared to today. Leasing or power-purchase agreement (PPA) options will also be 30-50% cheaper per kWh than current rates in most markets. Overall, rooftop solar electricity costs for residences are projected to be far below retail utility rates in most of the U.S. by 2030.

Sources: NREL 2030 Solar & Storage Cost Study, DOE 2030 Solar Cost Targets

Utility-Scale Solar

The United States DOE SunShot initiative set goals to reduce the cost of utility-scale solar electricity to $0.03 per kilowatt-hour by 2030, which they estimate is about half the projected cost of conventional electricity generation technologies. [1]

Historically, the average cost of electricity from new utility-scale solar farms has declined dramatically, from around 25 cents/kWh in 2010 to 5 cents/kWh in 2020. The SunShot initiative aims to cut costs even further to 3 cents/kWh by 2030, which would make utility-scale solar cost-competitive with all other forms of electricity generation. [2]

Reaching the 3 cent/kWh target would represent an additional 80% cost reduction compared to 2020 prices. This will be achieved through continued improvements in solar cell efficiency, reduced hardware and installation costs, increased competition, and economies of scale as the solar industry grows.

The projected 3 cent/kWh cost for utility-scale solar in 2030 is significantly below the cost of electricity from new coal and gas plants. It would make solar the most affordable electricity option for utilities and other power purchasers.

Solar With Storage

Solar paired with energy storage provides additional value and cost savings. According to the National Renewable Energy Laboratory (NREL), lithium-ion battery storage system (BESS) costs could fall by 47% by 2030 (source). As battery costs decline, adding storage to solar becomes more attractive for both utilities and homeowners.

For utilities, solar with storage allows greater integration of renewable energy onto the grid by smoothing out solar’s variability. Batteries charge when solar production is high, and discharge when solar drops off. This makes solar more “dispatchable” and valuable to the grid.

For homeowners, pairing storage with solar enables power to be stored and used at night. This increases potential savings by reducing reliance on grid electricity during peak pricing hours. According to NREL forecasts, the levelized cost of energy (LCOE) for residential solar plus storage could decline from 25 cents/kWh in 2020 to 9-14 cents/kWh in 2030 (source).

Lower costs for solar with storage will drive further adoption of these integrated systems among both utilities and households through 2030 and beyond.

Other Benefits

Solar energy provides a range of additional benefits beyond just electricity generation. The Value of solar report by Solar United Neighbors found that solar supports jobs and economic growth, improves public health, and reduces environmental damage compared to fossil fuels.

The rapidly growing solar industry directly employs over 230,000 American workers as of 2017, more than double the number in 2012 according to The Solar Foundation’s National Solar Jobs Census. Solar job growth is outpacing the overall economy by 17 times. This drives economic development and tax revenue in communities with solar manufacturing and installation.

Because solar energy produces no air or water pollution during operation, it also provides public health benefits. Reduced reliance on fossil fuels improves air quality and lowers respiratory and cardiovascular disease rates. The True Value of Solar study by Environment America Research & Policy Center estimated the health benefits of solar to be worth 5.4-28.2 cents per kWh generated.

In addition, solar energy reduces carbon emissions that contribute to climate change. The EPA estimates one megawatt-hour (MWh) of solar power avoids 0.8-1.2 metric tons of carbon emissions compared to the average electric grid. With solar costs declining, it is an increasingly affordable way to meet emissions reductions goals.

Challenges

While the overall long-term trajectory for solar costs is downwards, there are some potential obstacles that could impact the projections. Some key challenges that could affect the pace of cost declines include:

Policy changes – If subsidies or tax credits for solar were reduced or eliminated, it could slow adoption and dampen cost declines. For example, the expiration of the federal investment tax credit (ITC) could potentially slow solar growth if not extended or phased out gradually (source).

Trade disputes and tariffs – Ongoing trade disputes with China and tariffs on imported solar panels could make PV modules more expensive. Most solar panels are manufactured overseas, so policies that restrict trade could drive costs up (source).

Grid integration challenges – As solar makes up a larger share of electricity generation, managing grid stability and storage will add costs. Upgrades to transmission infrastructure could also add expenses that get passed on to consumers.

Lack of storage solutions – Widespread energy storage is needed to use high levels of solar power. Until economical large-scale storage is available, the growth of solar may slow down.

While these factors may impact the pace of decline, most experts expect the long-term downward price trend to continue through 2030 due to the continued maturation of solar technology and markets.

Conclusion

Over the past decade, the costs of solar energy have declined rapidly due to improvements in technology, manufacturing, scale, and more. Most experts project this trend will continue, with average solar costs falling a further 40-60% by 2030.

Residential rooftop solar is predicted to cost between 4 and 8 cents per kWh by 2030, compared to today’s average of around 15 cents per kWh. Utility-scale solar farms will likely range from 1.5-3 cents per kWh, versus around 5 cents per kWh in 2020.

Adding battery storage will add further costs, but those are also expected to fall substantially in the next decade. Overall, solar is on track to be cheaper than new fossil fuel electricity across most of the world by the end of this decade. This will enable solar to keep increasing its share of global electricity generation.

A few key takeaways:

Solar costs will continue rapidly declining as technology and scale improve.

By 2030, rooftop solar will be 50-70% cheaper than today in most markets.
Utility-scale solar will be 2-3x cheaper than today, at around 2-3 cents/kWh.
With storage, solar will often beat just the fuel costs of efficient gas plants.