While there have been some technological advances that account for the remarkable 80 percent reduction in photovoltaic (PV) panel prices over the last five years or so, most cost decreases can be attributed to scaling production and learning-by-doing manufacturing efficiencies.
Future panel prices are likely to continue to decrease, but at a much slower pace since panel prices are nearing 50 cents per watt and there is not much more to save beyond raw material costs. As a result, many manufacturers are trying to make advances in panel efficiency that can deliver across the board cost reductions because more efficient panels would require fewer materials to make, less space to transport, and fewer hours of labor to install the same power generation output.
Today industry and researchers are focusing on driving down "soft costs" (also called balance of system costs), items like financing, permitting, and labor, which now account for two thirds or more of a typical solar system installation. Innovative financing mechanisms, streamlined permitting and interconnection processes, and reduced supply-chain costs through greater scale are addition ways to further reduce the cost of installing and deploying solar energy.