The cost of solar panels has dropped by more than 99 percent since the 1970s, enabling widespread adoption of photovoltaic systems that convert sunlight into electricity, according to an interesting new research from the Massachusetts Institute of Technology (MIT).
A comprehensive MIT study has identified the specific innovations behind this dramatic transformation, revealing that technical advances across a web of diverse research efforts and industries played a pivotal role in making solar energy economically viable worldwide.
Cross-industry innovation network
The research, published in PLOS ONE, demonstrates that key innovations often originated outside the solar sector entirely, including advances in semiconductor fabrication, metallurgy, glass manufacturing, oil and gas drilling, construction processes, and even legal domains.
“Our results show just how intricate the process of cost improvement is, and how much scientific and engineering advances, often at a very basic level, are at the heart of these cost reductions,” study senior author Jessika Trancik said in a media statement. “A lot of knowledge was drawn from different domains and industries, and this network of knowledge is what makes these technologies improve.”
Trancik, a professor in MIT’s Institute for Data, Systems, and Society, led the research team that identified 81 unique innovations affecting photovoltaic system costs since 1970, ranging from improvements in antireflective coated glass to the implementation of fully online permitting interfaces.
Strategic Implications for Industry
The findings could prove instrumental for renewable energy companies making R&D investment decisions and help policymakers identify priority areas to accelerate manufacturing and deployment growth.
The research team included co-lead authors Goksin Kavlak, now a senior energy associate at the Brattle Group, and Magdalena Klemun, currently an assistant professor at Johns Hopkins University, along with former MIT postdoc Ajinkya Kamat and researchers Brittany Smith and Robert Margolis from the National Renewable Energy Laboratory.
Key findings
Building on mathematical models previously developed to analyze engineering technologies’ effects on photovoltaic costs, researchers combined quantitative cost modelling with detailed qualitative analysis of innovations affecting materials, manufacturing, and deployment processes.
“Our quantitative cost model guided the qualitative analysis, allowing us to look closely at innovations in areas that are hard to measure due to a lack of quantitative data,” Kavlak said in a media statement.
The team conducted structured literature scans for innovations likely to affect key cost drivers such as solar cells per module, wiring efficiency, and silicon wafer area. They then grouped innovations to identify patterns and tracked industry origins and timing for each advance.
Module vs. Balance-of-system innovations
The researchers distinguished between photovoltaic module costs and balance-of-system (BOS) costs, which cover mounting systems, inverters, and wiring. While PV modules are mass-produced and exportable, many BOS components are designed and built locally.
“By examining innovations both at the BOS level and within the modules, we identify the different types of innovations that have emerged in these two parts of PV technology,” Kavlak added.
The analysis revealed that BOS costs depend more heavily on “soft technologies”—nonphysical elements such as permitting procedures—which have contributed significantly less to cost improvements compared to hardware innovations.
“Often, it comes down to delays. Time is money, and if you have delays on construction sites and unpredictable processes, that affects these balance-of-system costs,” Trancik said.
Industry cross-pollination
The research found that innovations from semiconductor, electronics, metallurgy, and petroleum industries played major roles in reducing both PV and BOS costs. BOS costs were additionally impacted by advances in software engineering and electric utilities.
Notably, while most PV panel innovations originated in research organizations or industry, many BOS innovations were developed by city governments, U.S. states, or professional associations.
“I knew there was a lot going on with this technology, but the diversity of all these fields and how closely linked they are, and the fact that we can clearly see that network through this analysis, was interesting,” Trancik said in a media statement.
“PV was very well-positioned to absorb innovations from other industries—thanks to the right timing, physical compatibility, and supportive policies to adapt innovations for PV applications,” Klemun added.
Quantifying impact
To demonstrate their methodology’s practical applications, researchers estimated specific innovations’ quantitative impact. For example, wire sawing technology introduced in the 1980s led to an overall PV system cost decrease of $5 per watt by reducing silicon losses and increasing manufacturing throughput.
Future applications and computing power
The analysis highlighted the potential role of enhanced computing power in reducing BOS costs through automated engineering review systems and remote site assessment software.
“In terms of knowledge spillovers, what we’ve seen so far in PV may really just be the beginning,” Klemun said, pointing to robotics and AI-driven digital tools’ expanding role in driving future cost reductions and quality improvements.
The research team plans to apply this methodology to other renewable energy systems and further study soft technology to identify processes that could accelerate cost reductions.
“Through this retrospective analysis, you learn something valuable for future strategy because you can see what worked and what didn’t work, and the models can also be applied prospectively. It is also useful to know what adjacent sectors may help support improvement in a particular technology,” Trancik said. “Although the process of technological innovation may seem like a black box, we’ve shown that you can study it just like any other phenomena.”
The research provides crucial insights for understanding how complex technological systems evolve and offers a roadmap for accelerating innovation in renewable energy and other critical technologies through strategic cross-industry collaboration.