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Solar Costs to Drop by Half Before End of 2009

solar costs drop With the economic recession has come a drop in solar equipment costs. The weak demand resulting from tighter wallets and tougher financing has forced suppliers to slash prices to unprecedentedly low levels, which has proven advantageous for many homeowners who were once on the fence due to the high cost of solar power. It has also allowed many solar installers to maintain at least a steady if not over abundant work flow. Hence the solar industry, with added help of government incentives, has continued to grow during the recession.

A new report out this week from the research firm New Energy Finance uses those and other financial factors to make a bold prediction about overall solar costs in the remaining month-plus of 2009: Solar costs will drop by half before the end of 2009 compared to the end of 2008. The cost of solar equipment – panels, inverters, mounting systems, etc. – have been dropping steadily over the last decade. Plus, says New Energy Finance, the economy is showing serious signs of recovery and that fact combined with dropping equipment prices will loosen the recession-tight wallets of financiers in the solar sector and facilitate the 50 percent drop.

The last decade has seen a 30 percent drop in overall solar costs (equipment plus labor and installation costs), from an average $10.80 per watt in 1998 to $7.50 per watt in 2008. The recent recession has sped up that drop rate, facilitating New Energy Finance’s prediction for the last year. These statistics, however, are not universal over every sector of the solar industry. For instance, the drop for thin-film solar costs is more precipitous than conventional solar technology. Thin-film solar installations currently cost 25 percent less than conventional systems on average – although conventional, silicon-based panels are usually about 20-25 percent more efficient at converting sunlight. Yet thin-film cost levels are dropping at a rate that meets past predictions from industry analysts while conventional technology price reductions have “tapered off,” says the NEF report. Systems, usually concentrated solar power (CSP) systems, that use tracking devices to follow the sun across the sky each day are not seeing as significant a drop either.

One conclusion we can draw from these inter-technological disparities is that distributed generation, or rooftop solar power, continues to maintain and even increase its edge. According to Earth2Tech, some utilities in California are even reconsidering how many new transmission lines they need build. A strong argument, not including environmental reasons, for focusing on small-scale over utility-scale solar has been the cost of building new transmission lines to carry power from remote deserts to city centers. Should solar costs continue to drop as predicted by the NEF report, then rooftops and homeowners could be the beneficiaries of even greater attention from clean power hungry utilities and states.

Source: Earth2Tech

Photo Credit: Eastern Michigan University

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