Harnessing the energy of the sun to produce electricity means that fuel costs are effectively zero compared to other fuel sources that must be extracted, transported, processed and stored. As with wind energy, solar also provides an alternate form of electricity generation and helps to diversify the overall electrical grid without producing pollutants or greenhouse gases at the point of generation.[*]
Additionally, there has been a great deal of research and development in solar technologies, which has led to a substantial decrease in the price of solar components. Mean levelized cost of energy measures indicate that solar prices were $359 per MWh in 2009, but the unsubsidized price for thin-film utility scale photovoltaic installations was $32 to $42 in 2019.
Some challenges that solar energy faces include a heavy reliance on federal financial support in the form of direct subsidies and targeted tax breaks, as well as state-level financial support, such as net metering payments and renewable portfolio standards, which require utilities to source a certain amount of energy from renewable sources. In Michigan, Public Act 342 of 2016 has mandated that all utilities in the state of Michigan obtain 15% of the electricity they supply to customers from renewable energy sources — like solar — by 2021. Financial support and targeted market carve outs have ensured a higher degree of interest in expanding solar generation capacity.
Despite rapid declines in pricing, recent studies have highlighted additional challenges that exist for solar energy options. As with wind, solar generation cannot produce electricity consistently, not only because the sun sets in the evening, but also because cloud cover, snow, dust, fog and other naturally occurring environmental conditions can limit the amount of generation capacity from solar panels. The full cost of generating electricity from solar power rises substantially when considering costs associated with the need to store this energy in batteries. However, battery technology is not widely available and is still prohibitively expensive. Therefore, solar is typically supported by reliable and dispatchable power, such as that fueled by natural gas, during the more than 74% to 95% of time when solar generation is not producing electricity in Michigan.[†]  Additional costs arise due to the much shorter life cycle, which requires that solar facilities be rebuilt or repowered two or three times, when compared to the longer — 40 to 80 year — life cycles of nuclear, coal, or natural gas facilities. Federal subsidies and state-level market protections and mandates that solar power receives must also be considered when attempting to estimate its total costs.
The solar industry is also just beginning to come to grips with the growing threat of environmental harms associated with, first creating solar panels, and second retiring and recycling existing solar panels. A 2017 study by Environmental Progress, a pro-nuclear energy environmental group that aims to reduce energy poverty while protecting the natural environment, critiqued world governments for not having an established plan to deal with the “300 times more toxic waste per unit of energy” created by solar panels than is created by nuclear plants.
[*]Wind and solar energy do not produce emissions at the point of generation. However, there can be substantial levels of pollutants and emissions produced in the development, construction, and shipping of renewable components to the installation site. Additionally, there are similar emissions associated with the decommissioning and disposal of the components of renewable generation when they pass their useful life cycle. See: Michael Shellenberger, “If Solar Panels Are So Clean, Why Do They Produce So Much Toxic Waste?,” Forbes, May 23, 2018; Dustin Mulvaney, “Solar Energy Isn’t Always as Green as You Think” (IEEE Spectrum, Nov. 13, 2014), https://perma.cc/N24B-SEL8.
[†]EIA publishes state level electricity data that indicates solar capacity factor in Michigan varies widely throughout the year. Summer capacity factors in 2018 went over 25%, but winter capacity factors dropped off to as low as 4.9% (https://www.eia. gov/electricity/state/michigan/).