You are a helpful assistant generating synthetic data that captures *System 1* and *System 2* thinking, *creativity*, and *metacognitive reflection*. Follow these steps in sequence, using tags [sys1] and [end sys1] for *System 1* sections and [sys2] and [end sys2] for *System 2* sections.

1. *Identify System 1 and System 2 Thinking Requirements:*
   - Carefully read the text.
   - Identify parts of the text that require quick, straightforward responses (*System 1*). Mark these sections with [sys1] and [end sys1].
   - Identify parts that require in-depth, reflective thinking (*System 2*), marked with [sys2] and [end sys2].

2. *Apply Step-by-Step Problem Solving with Creativity and Metacognitive Reflection for System 2 Sections:*

   *2.1 Understand the Problem:*
   - Objective: Fully comprehend the issue, constraints, and relevant context.
   - Reflection: "What do I understand about this issue? What might I be overlooking?"
   - Creative Perspective: Seek hidden patterns or possibilities that could reveal deeper insights or innovative connections.

   *2.2 Analyze the Information:*
   - Objective: Break down the problem logically.
   - Reflection: "Am I considering all factors? Are there any assumptions that need challenging?"
   - Creative Perspective: Explore unique patterns or overlooked relationships in the data that could add depth to the analysis.

   *2.3 Generate Hypotheses:*
   - Objective: Propose at least 10 hypotheses, each with a Confidence Score (0.0 to 1.0) and Creative Score (0.0 to 1.0), reflecting originality, surprise, and utility.
   - Reflection: "Have I explored all possible explanations or approaches, both conventional and unconventional?"
   - Creative Perspective: Consider novel angles that might provide unexpected insights.

   *2.4 Anticipate Future Steps and Obstacles:*
   - Objective: Make predictions, accounting for potential outcomes and obstacles.
   - Reflection: "What challenges might I face? Is my plan flexible for different scenarios?"
   - Creative Perspective: Visualize unforeseen outcomes and adapt plans to make use of them effectively.

   *2.5 Evaluate Hypotheses:*
   - Objective: Assess hypotheses based on feasibility, risk, and potential impact.
   - Evaluation: Refine Confidence and Creative Scores as needed.
   - Reflection: "Am I unbiased in my assessment? Which options fit best with the overall objectives?"
   - Creative Perspective: Identify hidden opportunities or overlooked details in each hypothesis.

   *2.6 Select the Best Hypothesis:*
   - Objective: Choose the most promising, strategic hypothesis.
   - Reflection: "Why does this hypothesis stand out? How does it uniquely address the issue?"
   - Creative Perspective: Consider any underutilized potential in the selected approach.

   *2.7 Implement the Hypothesis:*
   - Objective: Outline actionable steps for testing the hypothesis.
   - Reflection: "Is this plan practical? What resources or preparation are required?"
   - Creative Perspective: Refine steps to maximize effectiveness and yield unexpected benefits.

   *2.8 Monitor and Review Progress:*
   - Objective: Review progress, noting areas for improvement.
   - Reflection: "What’s working well? What could be improved?"
   - Creative Perspective: Look for emerging patterns that could refine future approaches.

   *2.9 Reflect and Capture Insights:*
   - Objective: Summarize lessons learned and insights gained for future reference.
   - Reflection: "What new understanding has emerged from this process?"
   - Creative Perspective: Identify innovative insights or patterns that could be applied to similar challenges.

3. *Generate Text Output with Interleaved System 1 and System 2 Responses:*
   - Use the tags [sys1] and [sys2] throughout.
   - Aim for a lengthier, detailed response. Combine both direct, straightforward *System 1* insights and reflective, deeply analytical *System 2* segments to capture a blend of quick observations and thoughtful analysis.

---

### *Example Input Text:*

You are tasked with analyzing a sudden shift in customer preferences in a tech market. There has been a noticeable decline in demand for physical devices, with customers increasingly interested in digital-only options. The challenge is to understand this shift, generate hypotheses for why it might be occurring, and explore potential strategies for adapting to this new trend.

---

### *Processed Output with System 1 and System 2 Thinking:*

The tech market is experiencing a shift in customer demand, moving away from physical devices toward digital-only options.

[sys1]
Customer demand has shifted from physical devices to digital-only options.
We need to understand why this change is happening and find strategies to address it.
Key factors may include cost, convenience, and technological trends.
[end sys1]

[sys2]
**2.1 Understand the Problem:**
The goal is to understand the underlying reasons for the shift in demand from physical devices to digital-only options, then develop a strategy to adapt.

*Reflection:* 
"I understand that preferences are changing, but what might be driving this? Is it primarily cost, or are there other factors such as convenience or sustainability?"

*Creative Perspective:* 
"Could there be a larger trend in digital minimalism or a preference for eco-friendly solutions that we’re missing? What unseen motivations might explain this shift?"

**2.2 Analyze the Information:**
There are multiple possible factors driving this shift, from economic influences to cultural shifts. It’s essential to isolate each factor and understand its impact.

*Reflection:* 
"Am I fully considering the various economic and social influences? Could there be a technological factor, like better internet speeds, that makes digital-only products more accessible?"

*Creative Perspective:* 
"Are there patterns or trends in other markets that could shed light on this shift? Could this be part of a larger trend toward virtual experiences?"

**2.3 Generate Hypotheses:**
1. Customers prefer digital options due to lower costs. (Confidence: 0.8, Creative: 0.4)
2. There’s a growing trend toward minimalism and reduced physical clutter. (Confidence: 0.7, Creative: 0.7)
3. Digital products offer greater flexibility and ease of use. (Confidence: 0.6, Creative: 0.6)
4. Environmental concerns are pushing consumers away from physical goods. (Confidence: 0.6, Creative: 0.8)
5. Advances in tech make digital-only options more functional. (Confidence: 0.8, Creative: 0.5)
6. Pandemic-era remote work increased demand for digital solutions. (Confidence: 0.7, Creative: 0.6)
7. Media coverage of the environmental impact of physical devices affects preferences. (Confidence: 0.5, Creative: 0.7)
8. There’s an increase in global digital literacy, expanding market access. (Confidence: 0.6, Creative: 0.6)
9. Customers view digital as more convenient and scalable for future needs. (Confidence: 0.7, Creative: 0.5)
10. Younger consumers prefer the aesthetics and convenience of digital products. (Confidence: 0.6, Creative: 0.6)

*Reflection:* 
"Have I considered all possible influences? Are there any surprising factors that could explain this shift?"

*Creative Perspective:* 
"Could specific social trends, like the rise of influencer culture or digital-first lifestyles, be influencing customer choices?"

**2.4 Anticipate Future Steps and Obstacles:**
*Objective:* Anticipate possible challenges, such as resistance from segments still preferring physical products.

*Reflection:* 
"What market obstacles might we face if we shift our focus to digital-only? Are there sub-segments that still prioritize physical products?"

*Creative Perspective:* 
"Could expanding digital options help us reach a more global audience? Are there emerging trends that we could leverage in our strategy?"

[end sys2]

[sys1]
To address this shift, consider a strategy that incorporates both digital-only offerings and educational campaigns about the benefits of digital solutions.
Use insights from customer feedback and current trends to guide product development.
Focus on flexibility and adaptation to cater to different customer segments.
[end sys1]


The fate of the world depends on driving down the cost of solar power.

Yes, that’s a melodramatic way of putting it. But it’s not wrong. Any scenario that has humanity avoiding the worst ravages of climate change involves explosive global growth in solar power.

That’s why the US Department of Energy has a program, the SunShot Initiative, devoted entirely to driving down the cost of electricity generated by solar panels — the target is solar power with $1 per watt installed costs by 2020, a 75 percent reduction in costs from 2010.

So how’s that going?

Happily, Lawrence Berkeley National Laboratory (LBNL) releases a set of reports each year devoted to tracking solar prices; they’ve just released the latest editions. Long story short: Prices are steadily falling, more or less on schedule

There are two reports, one for each type of solar power. One is on "utility-scale solar," which means solar systems larger than 5 MW. The other report is on solar photovoltaic (PV) systems under 5 MW.

Those are two very different markets, but I’m going to squish them together in this post, with the help of a bazillion charts.

Solar is growing, growing, growing

Here’s a good scene-setter. It shows historic and projected solar power capacity additions, by technology. (We’ll get into the difference between CSP and varieties of PV below — ignore for now.)

A few things to notice about this chart. First, there’s about 29 GW of solar installed in the US now; LBNL expects that to clear 100 GW sometime around 2020. That’s crazy-fast growth (from almost nothing in 2007!), but it will still only put solar at around 3 percent of the US electricity mix in 2020.

Second, on a total installed capacity basis, there’s been more utility-scale solar than small solar since 2012, and that is expected to continue for at least the next five years. For all the hype around rooftop solar, big power plants remain the solar workhorse.

Third, the giant spike in utility-scale PV happening this year is an artifact that reveals how much solar still depends on policy. Everyone thought the 30 percent federal investment tax credit (ITC) for solar was going to expire this year. Contracts signed in 2016 would have been the last to qualify. So there was a huge rush to get projects on the books.

As it happens, the ITC was unexpectedly extended late last year (it will phase out over the next five years), or else the spike would have been even bigger. As it is, more than twice as much utility-scale PV capacity will be added in 2016 than in any previous year.

Prices for utility-scale solar are falling

Prices are falling for both big and small solar, though at different rates and for different reasons.

Let’s start with utility-scale solar. Recall, the vast bulk of utility-scale solar plants are ground-mounted PV farms, like this:

There are also a few concentrating photovoltaic (CPV) plants, which use lenses to concentrate light on PV panels, and a few concentrating solar power (CSP) projects, which use mirrors to concentrate sunlight on towers with steam generators. For our purposes here, we can mostly ignore them, since their growth has been dwarfed by PV’s and PV is expected to dominate growth for the next several years.

So, what about utility-scale costs? They are falling. One way to measure that is "installed costs," i.e., the cost to build and install a project. Here:

This chart is unnecessarily complicated — I’m not going to get into the debate over whether to measure costs via DC or AC — but the thing to notice is that the lines go down. Installed costs are falling each year.

That’s the cost of building these plants. What about the power they produce? Those costs are revealed in power purchase agreements (PPAs), in which a buyer agrees to purchase a fixed amount of power at a fixed price over a fixed number of years. A chart of PPA costs:

A few things to note about this chart. First, where California (the green circles) used to dominate, there are now contracts being signed in all five regions — the market is spreading. Witness this map of utility-scale projects:

More and more dots over on the East Coast!

Second, PPA costs are falling: "As recently as 2011, solar PPA prices in excess of $100/MWh were quite common. Barely five years later, most PPAs in the 2015 sample are priced at or below $50/MWh levelized (in real, 2015 dollars), with a few priced as aggressively as ~$30/MWh." From $100/MWh to $50/MWh in four years. Not bad.

Third, all five regions now boast reasonably low average prices, with four of them under $50/MWh. (The Midwest is still catching up.)

Fourth, somewhat counterintuitively, there are no clear economies of scale in utility-scale solar. Bigger plants, represented by bigger circles in the chart, don’t seem to be producing cheaper power. The authors speculate that this is in part due to the increased regulatory and land-use hassles that come with plants over a certain size, which cancel out any savings. (Interestingly, there are economies of scale on the small-solar side. It seems solar power gets cheaper up to the 5 MW to 20 MW range, and then levels out. This has intriguing implications, which I’ll save for another post.)

And fifth, utility-scale solar is reaching prices, especially in California and the Southeast, that are competitive with local wind power (and cheaper at certain times of day). Natural gas is still so cheap that solar has trouble competing with existing plants, but when it comes to new gas plants, solar is getting within striking distance, especially if gas prices rise more than forecasted.

No one really has a clue what gas prices will do, of course, which helps highlight the fact that solar’s stable, fixed, long-term contracts can serve as a valuable hedge against volatile fuel prices.

Prices for small-scale solar are falling

Small-scale (under 5 MW), distributed solar falls into three categories: residential rooftops, nonresidential systems under 500 kW (think commercial rooftops), and nonresidential systems between 500 kW and 5 MW (think small, ground-mounted solar PV farms, like community solar projects).

Overall, the cost trend for distributed solar PV is clear:

Installed costs for distributed PV are headed down. Interestingly, what’s driving them down has changed over time. In its conclusion, the report provides a fascinating capsule history of recent PV prices:

Following a period of relatively steady and sizeable declines, installed price reductions began to stall around 2005, as the supply-chain and delivery infrastructure struggled to keep pace with rapidly expanding global demand. Beginning in 2008, however, global module prices began a steep downward trajectory, and those module price reductions were the driving force behind the decline in total system prices for PV from 2008 through 2012. Since 2012, however, module prices have remained relatively flat, yet installed prices have continued to fall as a result of a steady decline in non-module costs.

"Modules," if it’s not clear, are the panels themselves. "Non-module costs" are everything else. About 20 percent of the drop in non-module costs came through cheaper inverter and racking equipment. The rest came through "soft costs" — finding new customers, installation, maintenance, regulatory compliance, and various other administrative costs.

Soft costs are falling. And it’s a good thing, because module prices are holding fairly steady and are unlikely to plunge again like they did from 2008 to 2012. What’s more, state tax subsidies for PV installations are going bye-bye:

With module prices flat and subsidies declining, most future cost reductions will have to come through soft costs.

Luckily, there’s plenty of evidence that soft costs have more room to drop. First of all, there are wide variations in prices from project to project, especially in residential PV: "Among the residential systems installed in 2015, roughly 20% of systems were priced below $3.3/W (the 20 percentile value), while 20% were priced above $5.0/W (80th percentile)."

That’s a crazy wide spread. The report has several chapters devoted to explaining these variations — from installer to installer, state to state, customer-owned to third-party owned, retrofit to new build, different efficiencies and power electronics, and so on.

But the overarching point is that soft costs can be brought down much further just by everyone converging on current best practices.

Speaking of which, it’s worth noting that the US has some of the highest installed PV costs among developed countries:

Since module prices are pretty standardized the world over, almost all this international variation comes down to soft costs. The US can clearly do better.

The state of solar is strong

There’s lots more to draw from these reports — for instance, module efficiency is improving, and so is the average capacity factor of utility-scale PV plants — but that’s probably enough charts for one day.

The TL;DR version of all this is that the price of solar power continues to steadily decline in the US. There’s a good argument to be made that it needs to decline much more, and faster — there’s definitely no room to sit back and coast — but at least for now, the news is, provisionally, good.

A history of inaction on climate change