Swanson’s Law Explained

The Swanson’s Law was coined by Richard Swanson, the founder of Sun Power Corporation, a solar panel manufacturer. The law originated from an article in The Economist published in early 2012. You’d be surprised to know that Swanson was the first person to make this discovery in the field of social energy.

The law states that the price of solar photo voltaic tends to drop 20 percent for every doubling of cumulative shipped volume. Swanson used the method of learning curve or experience curve analysis to support his observations.

The law establishes a consistent relationship between the cost of solar PV panels and the deployment of solar PV panels. This relationship shows that we are well on our way to seeing solar panels cost almost nothing namely, in future, solar energy will be free of cost! The idea is that consumers become producers as well as consumers (“prosumers”) through access to increasingly low-cost manufacturing equipment and other tools.

Currently, solar energy accounts for a quarter of a percent of the planet’s electricity supply, but the industry is growing at staggering speed. This process of growth is supported by the Swanson’s Law.

How cheap will Solar Energy really get?

According to the Swanson’s Law, the price point of solar energy drops of 20% each time. Therefore, the amount by which prices decrease must level off a bit more each time they decrease.

However, the final average price point will depend on the global solar manufacturing capacity along with some uncontrollable and unpredictable factors for eg- the cost of water, cost of mining raw materials and average global economic health.

Limitations:

Swanson’s law fails to address the balance of costs of solar systems today represented by labor and “balance of system” equipment such as inverters, racking and wiring. Today, panel costs account for a far less significant fraction of the total cost of a system than they did just a few years ago, making labor costs and balance-of-system costs more substantial.

Modern relevance:

The upshot is that the modules which are used to make solar-power plants now cost less than a dollar per watt of capacity. This means that in sunny regions such as California, photovoltaic power could already compete without subsidy with the more expensive parts of the traditional power market. Furthermore, technological developments that have been proved in the laboratory but have not yet moved into the factory mean Swanson’s law still has many years to run.

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