U.S. Department of Energy

Evaluating the Causes of Photovoltaics Cost Reduction: Why is PV different?

Logo of Massachusetts Institute of Technology. The bar chart below the logo shows the cost reduction in photovoltaics compared to other energy-conversion technologies. PV is performing better than coal, natural gas, nuclear fusion, wind, and solar thermal in reducing the cost of energy.

Photovoltaics have experienced rapid cost reductions at a rate unmatched by other energy-conversion technologies. (Trancik, Cross-Call, Environ. Sci. Technol. 2013)

Massachusetts Institute of Technology, under the Solar Energy Evolution and Diffusion Studies (SEEDS) program, is developing an overarching theory of technological innovation that captures the remarkable progress observed for photovoltaics (PV) over the past half century.


Photovoltaic technologies, including silicon and thin film solar cells, have experienced unprecedented cost reductions among electricity-conversion technologies. A number of micro- and macro-level explanations—ranging from constraints posed by fundamental materials properties to high-level theories of global economic productivity—suggest competing implications for how to sustain or accelerate the rate of cost decline. This project will formalize a single framework that can empirically decompose PV cost trajectories into a set of low- and high-level factors.


First, the project team will compile a large historical dataset compiling records for input and output costs, unit production and capacity, research expenditures, and material properties for numerous PV technologies. The dataset will form a basis for quantifying the relative importance of explanations for technological improvement, such as design features, the distance to theoretical efficiency limits, and input cost dynamics. A cost equation that folds in each of the relevant hypotheses will be formulated and refined. Finally, the new theory will be applied to form practical guidelines for policymakers and solar researchers.


Like the SunShot Initiative, clean energy research efforts are focused on achieving aggressive price and performance targets. This project will deliver a data-driven theory that can be used to extract ambitious but achievable policy recommendations and pathways for success.