Solar PV was invented in the 1950s, and began to be used in appreciable volumes for utility-scale electricity generation in the US in the early 2000s, but only around the 2010s did it start to become a large share of planned generation projects worldwide.
Since then, solar generation capacity has grown incredibly quickly. By some metrics, solar PV has been deployed faster than any other energy source in history, going from 100 terawatt-hours of generation to 1,000 terawatt-hours in just 8 years, compared to 12 years for wind and nuclear, 28 for natural gas, and 32 for coal.
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But while solar PV is growing rapidly, in absolute terms it’s still fairly small potatoes. As of 2023, solar made up around 4% of overall electricity generation, and less than 1% of total US energy production.
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Since its invention in the 1950s, the cost of solar PV has fallen by a factor of close to 10,000. In the last 10 years alone, the cost of solar PV cells has fallen by more than 50%, and they’re projected to get even cheaper. This has made solar PV one of the cheapest methods of electricity generation.
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On Earth, sunlight reaches the top of the atmosphere with an irradiance of 1,360 watts per square meter, but this gets attenuated as it travels through the air, and at Earth’s surface irradiance is about 1,000 watts (1 kilowatt) per square meter when the sun is directly overhead and not blocked by clouds. So a 21% efficient solar panel will have a maximum output of 210 watts per square meter.
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The average capacity factor of utility-scale solar PV in the US is around 23%, meaning that on average they produce 23% of the power they would if they were exposed to 1,000 watts per square meter of sunlight 24 hours a day. This capacity factor varies by location, with sunny Southwestern states having higher capacity factors than Northeastern states.
Peak power generation for a solar PV system will be in the middle of the day, when the sun is highest in the sky. This doesn’t align particularly well with patterns of electricity consumption, which tends to be highest in the early evening.
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Not only will clouds sporadically reduce the power generated from our panels, but cloud cover tends to be higher in winter, further reducing our already-anemic wintertime PV output.
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There are a few different ways we can address this intermittency problem. The most obvious one is to just use other sources of power when the sun isn’t shining; either power sources that can be turned on and off on demand (such as gas turbines), or other intermittent sources whose peaks are offset from solar (such as wind).
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In practice, dealing with intermittency requires both increasing the power produced by our panels and adding storage.
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As we increase the amount of storage, we can supply greater and greater proportions of our household’s electricity demand, reaching over 99% with 42 kilowatts (~200 square meters) of PV capacity and 80 kilowatt-hours of storage. This is around four times our maximum household power consumption, and roughly 40% more storage than the capacity of a base Tesla Model 3.
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Overall US costs are slightly more than $1,000 per kilowatt. We see that thanks to 70 years of learning curve improvements, the solar PV cells themselves are less than 1/3rd the cost of the overall system. The shrinking fraction of the cost of PV cells vs the rest of the system are why there’s interest in things like ground-mounted solar which can eliminate racking entirely, and reducing installation costs by robotically installing solar panels.
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Because solar and storage systems don’t require purchasing fuel, and have almost no moving parts, operations and maintenance costs are low. NREL estimates that for utility PV, O&M is about $16 dollars per kilowatt per year, or about 1.5% of capital costs annually.
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We can see that without any sort of storage, and with low amounts of solar (where the power can simply be used immediately without any going to waste), our solar system costs around 5.7 cents per kilowatt-hour. This is smack dab in the middle of what Lazard lists as the current range for LCOE for utility-scale solar in the US, and slightly more than the average LCOE for recently built US utility-scale solar plants.
However, as we expand the size of our system to serve a greater fraction of our electricity demand, our cost per kilowatt-hour quickly rises. At 50% of electricity served, we’re at 13 cents a kilowatt-hour. At 70% we’re over 16 cents. At 90%, we’re nearly 25 cents.