Going Solar Gets Better and Better (and Cheaper)!

While electricity prices are going up, the cost of solar panels are going down. The cost of installing solar is becoming more affordable all the time.  The panels themselves have become less expensive and with the abundance of installers out there the competition has also helped to reduce installed costs.  This makes now a great time to make a solar investment.

The cost for solar electricity has been going down significantly for over 30 years. Generally solar panels make up about 50% of the cost of a system, the inverter 10% and the balance of the system, installation and permits about 40%.  The costs for the panels themselves dropped by about 50 percent in 2011 starting the year at $1.85 per watt and are currently about $.097  to $1.15 per watt.  The price of the solar cells making up the panels is decreasing due to an increasing efficiency of the cells, dramatic manufacturing technology improvements and competition.  At this time, polysilicon is plentiful which as a main component of the solar panel also helps to keep the price down.

In 2005, the price of solar panels alone averaged about $3-$4 USD per watt of installed power. Today the installed cost of the entire system averages around $4-$5 USD per watt depending on whether it is a residential or commercial install.

These price drops are now making solar prices more competitive with conventional utility prices.  For instance, one expert cites an example in the Southwest.  Currently, installed residential electricity prices after incentives are fairly comparable.  The installed utility costs were about $3.00 per watt and the solar installed costs were about $5.00 per watt before incentives.  Once the incentives are applied the solar price becomes much more competitive.  However, current projections show that solar versus conventional utility will reach “parity” in 2014 without incentives. Something else of interest to note is that most cost analyses are done over a 20 year period.  However, PV systems are still 75% efficient after 50 years and the cost of running is system is almost zero.  While fossil fuel energy incurs yearly costs for the fuels and the prices for these fuels can be driven up by availability, shipping costs etc.

The government input has been significant in two ways.  The Department of Energy has been working for years to streamline the permit and inspection process which helps to expedite the installation process, keeping the costs down.  Also the various government incentives offered for renewable projects helped to drive this boom in solar.  The promise of these incentives encouraged new installers to open up, competing for jobs, driving the installation costs down.

 

Once a system is installed, there is relatively minimal capital output, the relevant costs for a system are purchase and installation.  A PV system requires very little maintenance.  If prospects for lowering electric bills and taking a role in reducing the country’s reliance on fossil fuels aren’t convincing enough, a discounted price on solar panels may entice more consumers to give their roof and their finances a makeover.