How Did Solar Energy Get So Cheap?

The cost of solar energy today illustrates the role government subsidies can play during the early development of critical technologies. Some technologies are sufficiently essential and worthy of development even when they do not make sense from a free market perspective. Companies operating in the free market typically seek a return on their investments in the near term or know they could sell those investments to earn a return.

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Solar energy development began with governments investing in basic research. The U.S. space program played a role in these efforts due to their need to power satellites and space stations. Some of their developments led to Japanese companies using solar technology to power watches and calculators. While these generated small amounts of energy, they provided helpful technology applications and further research.

Government policies, such as Germany’s federal feed-in program, have encouraged large-scale investments in solar technology and increased solar energy consumption. Similar programs in China, the U.S., and many others also played a significant role. While the specifics of these policies varied based on the nature of their economies, their common goal was to stimulate research and installation of solar technologies. This collective effort has led to economies of scale, significantly reducing the price of solar technology and making solar energy competitive with or cheaper than fossil fuel alternatives. Don’t hesitate to contact a solar installer if you’re interested in striking while the iron’s hot.

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