Market for solar panels
https://www.npr.org/2019/08/14/751234092/episode-616-how-solar-got-cheap
This podcast discusses recent advances in solar energy production that have affected its role in the electricity market. Solar panel installations have become so cheap that, with cooperation from banks and government subsidies, it has become an economically viable option for the average household. The main reasons for the decreasing solar energy costs are (1) the mass production of solar panels by China, (2) improved, efficient installation techniques, and (3) companies such as SolarCity reducing the upfront costs that consumers would have to pay. The information provided in this podcast is remarkable because solar panels are now becoming a competitor in the market from a pure economics standpoint. The consumer that does not care about the environment at all now has incentive to switch to solar.
An interesting point that is discussed in the podcast is how many households would be willing to make the switch. We can think of this in terms of a market clearing graph. There are broadly two groups of sellers, the existing electricity companies that use natural gas, oil etc., and the solar panel sellers like SolarCity. Until recently, most consumers valued the former group much higher than the latter. However, the prices for the solar panel sellers is steadily decreasing, and we have reached a point where some consumers would value them greater. Which consumers are these? The buyers who would switch to solar are people that own houses (as opposed to renting or living in apartments), in areas with good lighting (e.g. not surrounded by trees). This group of buyers ends up being around 10-20% of households in the U.S. As solar panels become more accessible, we can expect to reach a market clearing price, where this 10-20% of households convert to solar energy.