Solar panels are cheap but solar power isn't

Most people get this wrong. Let me explain.

You keep seeing the same chart everywhere. Solar panel prices falling. Year after year. You know what chart I'm talking about.

The narrative is simple: solar is winning. It is but it's not as cheap as people think.

Companies actually buying solar electricity are paying more, not less.

Solar panels are not electricity.

Solar panels are flour^*.

Stay with me.

Imagine flour got incredibly cheap overnight. New tech, massive factories, insane scale. Economists publish charts showing flour prices collapsing.

You'd assume bread should be almost free, right?

But you walk into a bakery. Bread costs more than last year.

That makes no sense. Until you realize flour is just one ingredient.

A bakery still needs a building. Ovens. Workers. Trucks. And money to open in the first place.

This is exactly what's happening in solar.

Here's what people get wrong. They see panel prices falling and assume electricity should follow. They share the chart. They build financial models around it. They make investment decisions based on it.

They're looking at the wrong number.

Nobody talks about the rest of the system. The land. The engineers. The construction crews. The transformers and transmission lines. The permits that take years. The interconnection queue that's backed up across the country.

And the one nobody wants to discuss: the cost of money.

Solar projects require massive upfront capital. Developers borrow to build them. When interest rates were near zero, borrowing was cheap. That pushed electricity prices down.

Then rates went up. And everything changed.

Panels kept getting cheaper. But the bakery got way more expensive.

Here's what actually matters. Utilities and big companies don't buy solar panels. They buy electricity through long-term contracts called PPAs. The price in those contracts reflects the entire system. Every cost. Every delay. Every dollar of interest.

Those PPA prices hit their lowest point around 2020. Since then, they've gone up in market after market.

Stop looking at flour prices to predict what bread will cost.

Start looking at the full bakery.

Solar panels are the flour. Electricity is the bread. And bread requires an entire bakery with a lot of moving parts.

^*You may be wondering why flour? Solar panels are already a manufactured product. They've been processed, assembled, packaged. Flour is the same. It's already been milled and refined. It's a ready to use ingredient that still needs a system around it to become the final product.