Cost Declining by sadmin

Posted on Tuesday, December 21st, 2010

Several days ago, the Lawrence Berkeley National Laboratory — which is part of the Department of Energy — released a report outlining solar cost trends over the past decade.

Dubbed “Tracking the Sun III: The Installed Cost of Photovoltaics in the U.S. from 1998-2009,” the report makes for pretty dry reading. If you’re an economist, a solar power wonk or just love numbers, by all means, dive in and read the whole report (PDF). For all you others out there, here’s what you need to know:

  • Solar power is more affordable now than ever before. According to the report’s numbers, the cost of an installed solar energy system has declined from $10.80 per watt in 1998 to around $7.50 per watt in 2009 (in 2009 dollars).
  • The number of solar energy installations is growing “at a rapid rate,” nationwide.
  • The cost of a solar home energy systems varies by region. Why? Incentives — like solar rebates and solar energy tax credits — vary considerably from state to state.

The following graph breaks down the average installed cost of a solar energy system into its component parts. “Module cost” refers to the cost of the solar panels — or solar modules. “Non-module cost” refers to the rest of the system — including the inverter, racks to hold the panels, wiring and other equipment. These pieces are sometimes referred to as the “balance of system.”

As you can see, solar costs are continuing to come down. So, do you install a solar home energy system now? Or should you wait? Here are a few things to consider:

(1) While solar power costs are expected to continue on a downward trend, solar rebates and other incentives are expected to be reduced as well. This means the out-of-pocket cost — or net cost after taking into account solar rebates, etc. — of a solar energy system may not change in the coming years.

(2) The longer you wait to install solar panels, the longer your utility bill continues to increase. Moreover, if you live in a state where solar renewable energy credits (SRECs) are traded, you’ll continue to miss out on generating income from selling those credits.

(3) If your solar home energy project promises to deliver a reasonable return on investment (ROI) today, it’s worth pursuing today. This last point is sometimes difficult to get your head around. But the bottom line is that if a project that generates meaningful utility savings — or similar “cash flows” — it’s worth pursuing regardless of whether solar panels end up costing less two, five or seven years from now.

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