The Solar Revolution: From Obscurity to Dominance

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Introduction

Over the past decade the expansion of the solar energy market has seen a remarkable and unprecedented transformation. Solar energy’s share of global electricity production skyrocketed from a mere 0.15% in 2010 to an impressive 4.52% in 2022.¹ This astonishing surge in solar power adoption has defied even the most optimistic predictions, leaving both skeptics and advocates astounded. Just a decade ago, a Harvard Business School paper deemed solar energy as “the most expensive renewable energy”.² Fast forward to the present, and we find ourselves entering the “terawatt age” of solar power, where the sun is considered the most cost-effective means of generating electricity.^{3 4} It’s an opportune time to explore how we arrived here and why previous forecasts, whether for or against solar, missed the mark.

Solar Energy’s Remarkable Rise

The transformation of solar energy from an expensive fossil fuel alternative to an accessible and clean source of power is nothing short of extraordinary. In 2010, fossil fuel power plants accounted for about two-thirds of newly built electricity capacity in the United States. By 2022, solar energy now constitutes half of all new power capacity added to the grid, with an additional quarter allocated to wind energy. A mere 17% is attributed to nonrenewable sources.⁵ Furthermore, recent statistics reveal that solar deployment has outpaced new installations of all other power sources combined.⁶

One of the most headline-worthy statistics is that according to the International Energy Agency (IEA), solar energy is poised to surpass fossil fuel investments this year. Just five years ago, the ratio of investments in fossil fuels to renewables was roughly one-to-one. Today, the IEA reports that “For every dollar invested in fossil fuels, about 1.7 dollars are now going into clean energy”.^{7 8} This remarkable shift represents a significant milestone in the history of solar energy, which has long been overshadowed by more economical fossil fuels.^{2 9}

Understanding Solar’s Adoption Curve

To comprehend the reasons behind the surge in solar energy adoption, we must examine its journey through an adoption curve, a concept that originated in the mid-20th century. The Diffusion of Innovations theory, introduced by Everett Rogers, offers valuable insights into the progression of technology adoption. This theory’s application to solar energy is a quintessential example of how adoption curves function.¹²

The Adoption Curve

Rogers’ Diffusion of Innovations theory, developed with the help of research on the spread of hybrid seed corn in the 1940s, identified three key stages in the adoption process: a “long period of slow initial growth,” followed by a “rapid rise in adoption,” and concluding with “a brief decline as the most resistant adopters accepted the technique”.¹³ This adoption curve resembles an S-shaped pattern, a pattern that has been observed in numerous technological transformations over the years.^{14 15}

Solar Energy’s Historical Progress

The history of solar energy adoption is fascinating, stretching back thousands of years to ancient China and Greece, where the sun’s orientation played a crucial role in architecture. Early proponents of solar energy sought to save money on utility bills, just like modern-day users.⁹

However, it’s essential to focus on recent history to grasp solar energy’s resurgence. In the 2010s, solar energy faced a decline in interest due to economic challenges. Even major supporters like Shell and BP began divesting from the technology. Shell’s CEO stated in 2010, “We are prepared to invest in Research & Development, including in alternative energies. But our activities need to give us profitability”.² BP Solar closed down the following year, declaring the division unprofitable.²⁰ This led to a 2012 Harvard paper branding solar energy as a technology that had never lived up to its potential.²

Predictions Gone Awry

Not everyone lost faith in solar energy during this period. In 2010, Greenpeace estimated that the world would install about 335,000 MW of solar capacity by 2020, representing a 737.5% increase.²² However, this estimate proved to be grossly underestimated. By 2021, solar energy had surpassed the terawatt milestone in installed capacity.²³

The International Energy Agency’s 2010 World Energy Outlook report also projected a drop in photovoltaic costs from over $350 per MWh to just over $200 per MWh by 2020.²⁴ In reality, the global weighted average levelized cost of energy (LCOE) for solar energy is currently approximately $120 per MWh with energy storage and about $50 per MWh without energy storage.⁴ These dramatic cost reductions have made solar energy a viable option for consumers, with the average U.S. homeowner spending around $20,000 on a rooftop solar system.⁵

Rapid Solar Advancements

The significant drop in solar energy costs is a testament to the rapid advancements in the technology. In 1975, it would have cost over a million dollars to install an average-sized rooftop solar panel system on a home, with each PV module priced at about $115 per watt. By 2010, the cost per watt began to level off, and as of 2021, modules are available for about $0.27 per watt.⁵ Notably, the prices of rooftop solar systems are even lower in countries like Australia and Germany.²⁵

The Psychology of Solar Adoption

Rogers’ Diffusion of Innovations theory also sheds light on the psychological aspects of solar energy adoption. One critical attribute of innovations is “relative advantage,” which has posed challenges for solar energy adoption. Innovations with preventive aspects, such as renewable energy technologies, are often less appealing because they do not offer immediate or visible benefits.^{18 27} When people are introduced to ideas aimed at averting negative outcomes rather than producing positive results, their interest tends to wane, a challenge observed in climate change education and public health campaigns.^{18 27}

Throughout history, solar energy’s feasibility has been explored primarily to address or mitigate fuel crises. Early inventors like Augustin Mouchot and John Ericsson sought solar alternatives to coal due to concerns about depleting coal supplies. This issue, combined with solar energy’s high upfront costs, deterred potential adopters, leading to boom-and-bust cycles for solar technologies.⁹

The Concept of Critical Mass

Rogers’ theory also introduces the concept of “critical mass.” When an innovation reaches critical mass, the struggle to persuade non-adopters vanishes, and its spread accelerates. In essence, it becomes self-sustaining. The value of an innovation for future adopters increases as more people join the wave.²⁷

However, this can work in reverse, as evidenced by the history of solar technology. When people perceive that others are abandoning an innovation, a domino effect can threaten its survival. This phenomenon played a role in the decline of previous solar heydays, leading to the preservation of century-old solar water heaters in the state of Florida.^{27 9}

Incentives and the Path to Critical Mass

Incentives play a crucial role in pushing innovations toward critical mass. Rewarding early adopters helps innovations climb the adoption curve until they reach the critical mass threshold (27). Notably, feed-in tariffs implemented by countries like China, Germany, and Japan have significantly contributed to the growth of renewable energy. These incentives have encouraged the production of renewable energy, making these nations leaders in solar capacity.^{28 29}

The Importance of Incentives

It’s essential to highlight that undermining programs like net metering can hinder the transition to renewable energy. Without incentives to encourage early adoption by those willing to bear high upfront costs, any technology is vulnerable to losing momentum. Incentivizing solar rooftops has proven effective in promoting the widespread adoption of solar energy.²⁷

The Role of Government Support

The United States’ passage of the Inflation Reduction Act has played a substantial role in enhancing the credibility of solar energy. A survey conducted by Aurora Solar of 898 solar professionals in the U.S. revealed that over 45% of solar installers credit the IRA with increasing interest in solar. Another 40% expect solar’s popularity to continue growing.³⁰ Government support and tax incentives have spurred investment and growth in the solar industry, illustrating how policy can drive the adoption of renewable energy technologies.^{31 32}

Conclusion

The evolution of solar energy from an expensive and underutilized technology to a dominant force in the global energy landscape is a testament to the combined effects of economic, technological, and psychological factors. Solar’s remarkable cost reductions, fueled by advancements in technology and government support, have made it a viable and attractive energy source for consumers. Understanding the adoption curve and the role of critical mass and incentives in technology adoption provides valuable insights into the dynamics of solar energy’s rise.

As the world continues to grapple with the urgent need to transition to clean energy sources and combat climate change, the solar revolution serves as a compelling case study of how innovations can transform the energy landscape when the right conditions are met. Solar energy’s journey from obscurity to dominance is not only a remarkable success story but also a beacon of hope for a sustainable energy future.

Source: How Solar Power Got So Cheap … So Fast

Mark Pospicil

If he is not at his desk burning through his mouse pad you can find Mark sweating on the trail (summer) or prying himself from the ice (winter) with at least one kiddo close by. Mark grew up in the southern region of the U.S. where the heat index reaches triple digits for a good portion of the year. As soon as he learned how to drive with some competence, he hit the road to embark across the U.S. and Canadian territories exploring new frontiers. Shoveling his way through mountains of snowbanks he settled down in Big Sky, MT in the Spring of 2006. Since 2006 he has worked his way down the hill to the quaint but expanding town of Bozeman, MT. Here he has worked persistently at developing relationships in various fields of construction and planning – always with a strong influence of environmental stewardship, uncompromised integrity, and graceful humility.