Falling Solar Panel Costs are Great for Homeowners, Bad for Producers

We’ve known for years now that the cost of residential solar is steadily dropping, making the installation more affordable than ever. Here to discuss yet another projected decrease in pricing is writer and solar expert Kriss Bergethon.

What the experts predict for home solar

Lux Research recently projected the amount of solar power installations to grow by 15.5% per year, but interestingly, that revenue will stay flat until 2016.

In addition, a report from Navigant Consulting discovered that the price of solar panels is down almost 20% as of August, 2011.

What does this mean for you?

These reports show that you, the homeowner, are poised to benefit from the price reduction, while manufacturers can expect an almost flat profit margin for the next few years.

Solar panel brands are in a constant price competition. This boils down to literally shaving price per watt by pennies in order to beat out competitors. The reports mean shrinking profit margins, with concerns over demand for panels rising. Manufacturing capacity for solar hardware is increasing, but the unknown factor is if there will be enough buyers to consume the increased output.

Homeowners stand to benefit from the softening in prices, as it translates to more solar capacity for the same amount.

To get pricing on solar installation in your area, click here.

The lower prices give rise to the idea that solar leasing, an alternative to purchasing panels outright, may gain more traction. However, lower prices go beyond that. Solar industry analysts believe that there is an ultimate benefit in the falling prices. It makes solar power leasing viable in states that have been written off in the past.

Solar power leasing is designed to provide an alternative to purchasing a solar panel array upfront. Instead of buying the solar panels, consumers pay a monthly fee that reduces their electric bill. In a leasing situation, a predetermined fee is set for 20 years.

Homeowners can also participate in a power purchase agreement (PPA), in which the consumer buys power from the solar provider. A PPA is cheaper than buying from traditional grid suppliers.

How much do home solar systems cost today?

You can expect to pay $15,000 to $30,000 for the purchase and installation of a complete rooftop solar power array. A 30-percent federal tax incentive and state rebates serve to lower the cost. Many homeowners today pay just half the total cost of solar once all the incentives have kicked in.

It is thought that solar power has the potential to reach what is known as “grid parity,” wherein the cost of solar power is cheaper than traditional grid suppliers. This theory can become reality if the price of solar panels continues its precipitous decline.

Lux Research projects that grid parity will reach commercial solar panel installations first, and that 10 countries will reach that point by 2016. For the time being, state subsidies and the cost of retail power are key to allowing solar power to undercut grid power. Anticipated increases in the cost of wholesale and retail electricity will serve to increase demand for solar power.

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Kriss Bergethon is a solar expert and writer from Colorado.  Visit his site at Solar Panels for more information.

Posted on August 29th in Solar News by Brittany.