In the spring of 1954, the press excitedly gathered around Bell Laboratories’ latest invention— a silicon-based solar cell that could efficiently convert the sun's energy into electrical current. The creation was celebrated as the dawn of a new era, as reporters touted that civilization would soon run on the sun’s limitless energy. But the dream had a catch, as this first commercially sold solar cell cost around $300 per watt, meaning at its current rate, it would cost well over a million to buy a unit large enough to power a single home.
But today in many countries solar is the cheapest form of energy to produce, surpassing fossil fuel alternatives like coal and natural gas. Millions of homes are equipped with rooftop solar, with most units paying for themselves in their first 7 to 12 years and then generating further savings.
So how did solar become so affordable?
A turning point in solar’s price history occurred on the floor of Germany’s parliament, where in 2000, Herman Scheer introduced the Renewable Energy Sources Act. This legislation laid out a vision for the country’s energy future in solar and wind. It incentivized citizens to personally invest in rooftop solar panels by guaranteeing payment to homeowners for the renewable energy they generated and sold to the grid. The pay rate for this electricity was highly subsidized, at times reaching four times the market price. Several other countries soon followed Germany’s example, implementing similar policies and incentives to drive their country’s solar use.
This created unprecedented demand for solar panels worldwide. Manufacturers were able to scale up production and innovate in ways that cut costs. As a result, solar panel prices dropped, while efficiency grew. Today, a 46-square-meter rooftop solar unit is often efficient enough to fully power a home, and this residential unit no longer costs millions— in the US in 2022, the average consumer cost of a rooftop solar unit ranged from around $17,000 to $23,000. These prices dropped by over 60% between 2010 and 2020 alone.
So how much money can you save by switching to solar?
US solar equipped homeowners can save around $1,500 per year on their energy bills, equating to a net savings of $10,000 to $30,000 during the unit’s lifetime. Month-to-month savings tend to vary, based on the amount of direct sunlight your panel receives, weather conditions, and the price of electricity where you live.
But not everyone can get solar. Adopting solar can be difficult for renters, and in many countries, more than 25% of adults don’t own their own homes. Even if you do, your roof must meet certain orientation and tilt requirements to make solar a worthwhile investment.
And while units often pay for themselves through offset energy costs, the initial purchase and installation price for solar can be expensive. But several companies have adopted solar leasing models, where they finance the material costs, installation, and upkeep of the rooftop systems. Homeowners can then buy the panel’s generated electricity at a fixed rate that’s generally lower than the local utility’s price.
Still, many are working towards community-based solutions, which would enable entire neighborhoods to profit from solar use. Europe is home to more than 7,000 community energy associations, where local members collectively invest in wind turbines and solar panels to power their local grid. In 2005, the German town of Wolfhagen created an 800 member citizens co-op, which communally invested $2.84 million to buy up 25% of the local energy company and expand its renewables program. Today, its turbines and panels generate enough energy to meet the town’s needs and then some. Surplus energy is sold to neighboring towns, and profits are reinvested back into the community.
For many, the appeal of solar goes beyond just savings. Homes equipped with it are more climate resilient, because they can be protected from utility grid outages and brownouts. Not to mention solar’s key role in decarbonizing the energy grid. By working together with larger-scale wind and solar farms, rooftop solar units help reduce our reliance on fossil fuels, paving the way for a cleaner and more reliable energy future.
