I started working in solar in 2010. At that point everyone was talking about how cheap solar panels had become on the back of huge growth in Germany and Australia. They were around $2/W at that point, and panels were 14% efficient. Then prices just continues to tumble, faster and further than anyone could have imagined.
15 years later, panels are over 90% cheaper, and efficiency of panels are reaching 25%+.
Now we are seeing news of a module reaching 34% efficiency. To be clear, this is a highly specialised module, likely to be used for applications where price doesn’t matter, but it is a clear indication that the efficiency march continues onward. And perhaps with it, continued decreasing of price per Watt as well.
Panels and inverters for a long time, haven’t been the main cost of a system. What is going to further drive down the cost of solar going forward, depends on where you are. In the US, the biggest costs now are ‘soft’ costs. Customer acquisition, design, permits and connection.
For hybrid solar, lowering battery cost is a huge opportunity
However, for a hybrid system (solar + battery), the cost of a battery itself accounts for nearly 40% of the cost of the system.
Hybrid system cost breakdown - Australia
Item
Cost
% of subtotal
Solar panels
A$3,087
15.2%
Solar inverter
A$1,544
7.6%
Racking & electrical
A$1,621
8.0%
Solar installation
A$4,246
20.9%
Inspection & fees
A$648
3.2%
Battery
A$7,943
39.0%
Battery installation
A$1,264
6.2%
Total
A$20,352
100%
Source: Photonik.solar
So, it is the fall in the cost of batteries that is the biggest opportunity to lowering overall system cost. Stationary battery costs have halved since 2022, and indications are that they will continue to fall, as technology, demand and competition heats up. Stationary batteries require simpler tech, and are starting to diverge in cost from the more complex requirements of mobile batteries.
*2020–2024 assume stationary-storage pack prices tracked the average lithium-ion battery pack price. BloombergNEF first reported stationary storage as a separate category in 2025, when it became the cheapest battery segment at $70/kWh.
If this trajectory continues, we could see storage costs halve again in the next three years, reaching $35/kWh by 2028/2029. This would dramatically change the cost of storage, and by extension solar and renewables.
Potential positives of cheap storage :
Enormous growth in distributed electricity and storage
Greater energy independence for homeowners
Value of solar & wind increases, as it can be used on demand, not just whilst it is generated
Electricity prices fall, as cheap renewables can be used at peak times
Economics of fossil fuels becomes even less attractive
Conversion to electricity becomes more attractive, heating, hot water, cooking, industrial processes etc
Energy security, sufficient energy can be generated by more countries, rather than relying on fossil fuels shipped from far
Reduction in greenhouse gases
Potential negatives of cheap storage :
Energy usage explodes due to low cost, negating any reduction in emissions
Explosive growth in AI and data centres
Battery manufacturing and mining for battery inputs becomes a major environmental challenge
Energy security cuts both ways, we could see significant reliance on a few battery producing countries, and manufacturers
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