After falling consistently for many years, installation costs for PV systems have made a somewhat surprising and disturbing turn. According to Building Green, costs have risen steadily from $6.93 per watt in 2005, to $7.25 per watt in 2006 to $7.62 per watt in 2007. This strange trend can be rather perplexing considering the recent wave of federal and state solar rebates and incentives and the fact that the solar power industry is growing by leaps and bounds. With demand for PV systems being so high and growing exceptionally fast, how can prices be rising? Well, demand is exactly why prices are rising. It seems that the production end of the solar industry just cannot keep up with demand. The rising cost of installation boils down to a shortage of polysilicon. Polysilicon is the key ingredient in traditional solar cells and represent over half the cost of PV panel production. Manufacturers of polysilicon simply do not have the production capacity to keep up with demand, which is projected to rise at an even faster rate. Many manufacturers are amping up their capacity but cannot yet catch up. In addition, the solar industry is not the only consumer of polysilicon. It is also a key component of semiconductors for the electronics industry among others. In fact, two-thirds of polysilicon production goes to the manufacture of semiconductors. In the short term at least, polysilicon shortages will continue to drive PV costs higher until manufacturers can catch up. However, this trend, by any measure, does not denote disaster for the solar industry and may be more of a foreshadowing of the imminent future of PV. New technologies such as thin-film, polycrystalline cells already promise a more aesthetic, inexpensive residential solar opportunity. Thin-film cells (TFPV) are expected to grow exponentially in popularity over the next decade largely because they are far cheaper to produce than traditional PV cells. With the current demand for solar power and the expansion of solar tax incentives it is unlikely that the polysilicon shortage or rising PV prices will have any long-term effect on the industry. The powerful push, both politically and technologically, toward renewable energy sources forecasts a positive future for solar PV. With rebates guaranteed through 2008 and silicon technology at its height, you may be ready to install your solar residential system today. Contact one of our preferred installers for a free estimate!