How solar panel cost and efficiency have changed over time

Solar panel technology has existed for a long time—Bell Labs invented the first useful solar cell more than 60 years ago, and scientists have known for centuries that the sun can be used to produce energy. However, in the last ten years or so, solar photovoltaics (PV) has taken off as a renewable energy source. Two major factors influence the technology's growth: the steady improvement of both solar panel cost and solar panel efficiency over time.

The very first solar cells, invented in the 1800s, were less than one percent efficient, not nearly enough to make them a useful energy source. It wasn't until 1954 that Bell Labs invented the first useful silicon solar panel, which was about six percent efficient.

Since then, solar PV technology has evolved at a rapid pace. Manufacturers have created prototype solar panels that are over 30 percent efficient, and homeowners on the EnergySage Marketplace regularly receive quotes featuring solar panels with 20 to 22 percent efficiency from solar installers. These high-efficiency panels can produce 25 percent more electricity than the lower-tier economy panels that made up most of the market in past years.

The technology exists to increase solar panel efficiency even further. Researchers have managed to achieve 47.1 percent efficiency using advanced cell structures. However, super high-efficiency panels are typically made of more expensive materials not used in rooftop solar panels, and as a result, they aren't currently cost-effective.

Solar panel efficiency measures a solar panel's ability to convert sunlight into usable electricity. For example, if the sun shines on a high-efficiency solar panel with a 20 percent rating, then 20 percent of the sun's energy will be converted to solar power. Read this article to learn more about the most efficient solar panels today.

The rate of solar panel efficiency has been long, but it is heating up right now. Take a look at how much the past years have mattered in the grand scheme of solar innovation:

• 1960: Hoffman Electric achieves 14% efficiency in PV cells

• 1992: University of South Florida fabricates a 15.89% efficient thin-film cell

• 2012: Solar Frontier reaches 17.8% efficiency

• June 2015: First Solar breaks 18.2% efficiency

• October 2015: SolarCity announces 22.04% efficiency, and Panasonic announces 22.5% efficiency

• November 2015: SunPower achieves 22.8% efficiency, validated by the National Renewable Energy Laboratory (NREL)

• January 2016: NREL and the Swiss Center for Electronics and Microtechnology (CSEM) achieved 29.8% efficiency

• July 2017: A group of U.S. scientists develops a prototype for a solar cell capable of 44.5% efficiency

• April 2020: NREL researchers develop a six-junction III-V solar cell with 47.1% efficiency

Over a decade ago, in 2009, a solar panel installation cost $8.50 per watt. Today's solar industry looks very different: Besides increasing solar panel efficiency, solar panel producers have significantly improved their manufacturing processes. Solar installers, too, can deploy solar PV across the United States more efficiently now than they could ten years ago. The result: the price of solar has fallen dramatically to just $2.77/watt.

There's evidence that solar prices are continuing to fall. Prices featured in quotes to homeowners on the EnergySage Solar Marketplace continue to fall:

Solar panel cost over time

Over the past ten years, price decreases have been a significant reason homeowners are increasingly interested in installing solar panels.

Changes in solar panel cost over time can be explained by Swanson's Law, which states that the price of solar PV modules decreases by about 20 percent for every doubling in global solar capacity. The law is named after Richard Swanson, founder of high-efficiency solar panel manufacturer SunPower. It indicates a phenomenon seen across many different technologies: new industries face a significant learning curve, and as they improve, prices fall.

In this way, solar panel manufacturers aren't that different from computer manufacturers. Think about how much more expensive and less powerful your laptop was in 2009 than today's technology. If solar PV technology continues the same trend, it's easy to envision a future where solar is on every rooftop.

How efficient are solar panels in the real world? 

Many factors can affect the efficiency of your solar panels, including weather, debris on your panel, or installation issues. All solar panels are tested under Standard Test Conditions to produce an accurate and standardized efficiency quote. Your panel's temperature coefficient can help you understand how the efficiency may fluctuate depending on the temperature outside or how the PV cells in your panel react to summer heat or winter cold. 

Will solar panels ever reach 50 percent efficiency?

Maybe! Researchers say that the technology NREL uses to create solar cells with 47.1 percent efficiency can be fine-tuned to reach 50 percent efficiency in the future. This technology does differ from traditional solar cell devices because there are 140 layers of the six collector materials used to make this high-efficiency panel. The journal Nature Energy published a detailed description of the new technology.

What is the most efficient type of solar panel?

Currently, the most efficient solar panels available on the market are about 23 percent efficient. More specifically, SunPower's high-efficiency solar panels are recognized as the most efficient solar panels available, with a rating of 22.8 percent. Other manufacturers making the most efficient solar panels include LG (22 percent) and REC Solar (21.7 percent).

It's easy to compare quotes with efficient solar panels on the EnergySage Marketplace. You can receive free quotes from vetted installers when you register your property! If you're in the early stage of shopping for solar and would like a ballpark estimate for an installation, try our Solar Calculator, which offers upfront cost and long-term savings estimates based on your location and roof type.