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4 Reasons the Cost of Solar Energy Keeps Falling

The U.S. now has enough solar energy capacity to power 6.2 million homes, according to a recent report by the Solar Energy Industry Association. Solar power is growing at an unprecedented rate of 43 percent, year over year. The plummeting cost of solar energy is fueling a boom in popularity.

The mission of the SunShot Initiative by the Department of Energy is “to make solar energy fully cost-competitive with traditional energy sources before the end of this decade, making this clean renewable energy resource more affordable and accessible to Americans.” The goal is to reduce the cost of solar energy to $.06 per kilowatt hour by 2020, and this appears to be very attainable at this point.

In fact, solar has already achieved price parity in 10 states. How’d that happen? Let’s look behind the scenes to gain a deeper understanding of price trends and how they impact the solar energy market.

1. Manufacturing Costs Taper Down

Solar panels, inverter costs and panel racking costs have come down at a steady pace each year, resulting in large declines over time. There are a variety of causes, including manufacturing efficiencies, a steep decline in polysilicone prices from their high levels a decade ago (a material used by the photovoltaic solar industry) and fierce competition among manufacturers.

This downward price trend is very common with new technologies. Remember how expensive new DVD players and cell phones were when they were first introduced? The cost per unit declines sharply once manufacturing kicks into high gear.

2. Solar Technology Advances

The greater the efficiency of the solar panels (and other equipment), the greater the overall energy production of the system. Although the most efficient solar panels available on the market have an efficiency of 22.5 percent, most panels are in the 14 to 16 percent range. This difference in efficiency means that one system can have a solar energy output that is 50 percent greater than a less efficient system. Some other associated costs are reduced by greater efficiency, such as racking system equipment, installation and transportation costs. Efficiency in turn fuels greater opportunities to sell more solar generation capacity, as many residential systems are limited by the space available for mounting panels.

3. Solar Investment Tax Credit

Since its passage in 2006, the Solar Investment Tax Credit has offered greater stability and a significant incentive for installing solar energy systems, for both the residential and commercial markets. The tax credit was created to support the rapid deployment of solar energy until it is cost competitive without it. The incentive offers a 30 percent tax credit for both residential and commercial solar energy systems. The credit was extended in 2015 and will be in effect until 2023, tapering off over time.

For residential solar systems, the tax credit is a dollar-for-dollar reduction in the federal income taxes owed by the homeowners by 30 percent of the installed cost of the solar system. A $10,000 solar system can qualify for a $3,000 tax credit. This is different from a tax write-off and is more valuable to the taxpayer.

Homeowners who lease solar systems cannot take advantage of the tax credit directly, but the solar leasor can. In theory, some or all of the savings generated from the tax credit are passed onto the homeowners through solar leases with more-affordable terms.

GTM Research predicts the tax credit extension will boost U.S. solar energy installations by 54 percent through 2020 and add enough solar energy generation capacity to power 4 million homes. Although the tax credit doesn’t directly reduce the cost of solar energy, it does help create the economy of scale needed for solar panels to be cost effective and helps create stability in the market for companies wanting to invest in research, infrastructure and other investments with a longer return. It’s worth noting that some, however, argue that the tax credit stifles innovation by artificially lowering prices.

4. Synergy Allows for Greater Solar Energy Growth

The trends that have surrounded the growth of the solar energy industry continue, making future growth likely. Today’s solar systems are generating more electricity and  a larger percentage of total household energy use. EnergySage, the so-called “Expedia of solar,” gathers data on quoted solar systems, offering insights into the months ahead. EnergySage recently released the third semiannual Solar Marketplace Intel Report, which indicates that recent solar energy trends will continue. For example, the quoted H1 2016 solar systems have a payback period of 7.5 years on average, compared with 8.2 years in H1 2015. EnergySage reports that the average quoted solar system size is 7.9 kW, compared with the average installed solar system size of just 5 kW.

The lower the price of a solar system and the shorter the payback period, the more people will go solar. People also tend to install solar energy systems when their neighbors do, thus solar installations encourage greater growth.

Featured image courtesy of Shutterstock.com

About
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Sarah Lozanova

Sarah Lozanova

is a renewable energy and sustainability journalist and communications professional with an MBA in sustainable management. She is a regular contributor to environmental and energy publications and websites, including Mother Earth Living, Earth911, Home Power, Triple Pundit, CleanTechnica, The Ecologist, GreenBiz, Renewable Energy World and Windpower Engineering. Lozanova also works with several corporate clients as a public relations writer to gain visibility for renewable energy and sustainability achievements.

Latest posts by Sarah Lozanova (see all)

4 Reasons the Cost of Solar Energy Keeps Falling – November 21, 2016
Tesla’s New Solar Roof Is Pretty, But Is It Practical? – November 7, 2016
3 DIY Compost Bin Designs You Can Make This Weekend – November 3, 2016

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4 Reasons the Cost of Solar Energy Keeps Falling

Posted in FF, GE, LG, ONA, PUR, solar, solar panels, solar power, Uncategorized | Tagged , , , , , , , , | Comments Off on 4 Reasons the Cost of Solar Energy Keeps Falling

Renewable Energy Roundup: 5 Myths About Solar Energy

Renewable energy continues to advance, particularly the solar energy market which is dynamic and evolving quickly. Proof you say? Let’s take a look at a few facts first.

The solar industry had another record-breaking year in 2015, with installed capacity increasing 16% over 2014 installations.
At the same time, solar system prices fell by 17%.
For the first ever, solar beat natural gas in new power capacity last year, with solar energy contributing 29.4% of total new electric generation capacity.

Meanwhile, solar technology advances are making systems more energy efficient and resistant to shade from trees and buildings, allowing them to produce a larger percentage of overall household energy consumption. Many solar installers now offer solar system monitoring, so homeowners can view historic and real-time solar system output data. With such a dynamic market and with technology advances, things that were true a few years ago may no longer be true today. 

Researching renewable energy

Separating fact from fiction, let’s take a look at a few myths about solar energy that still prevail. Here are the Top 5 myths about renewable energy — specifically solar.

Myth 1: Solar PV systems require a lot of maintenance and upkeep

With no moving parts, grid-tied solar renewable energy electric systems (without batteries) requires virtually no maintenance. Image Credit: LUCARELLI TEMISTOCLE / Shutterstock

With no moving parts, grid-tied solar electric systems (without batteries) requires virtually no maintenance. This is impressive, considering the design life of most solar systems is 25 to 30 years. Most solar panel manufacturers even provide 20 to 30 year warranties, because the technology is so reliable.

It is however recommended to inspect solar panels for dust or debris a couple times a year, and clean them with the garden hose if necessary to ensure optimum energy output. Use caution when viewing or cleaning solar panels from high heights, if they cannot be clearly viewed from the ground. Most solar system owners never do inspect panels for cleanliness or clean them however and their systems continues to perform well. 

Most residential solar systems are connected to the electric grid and have no batteries, which makes them more efficient than a system without batteries. Most utility companies across the country have net metering programs to credit solar system owners for feeding solar electricity to the power grid, when the system is generating more than the home consumes at the time.

Batteries decrease the sustainability and efficiency of the solar system, as not all the power is actually captured and used. Like any other kind of battery, solar system batteries do require maintenance and will need to be replaced every five to ten years. They are also bulky and the batteries themselves have an environmental impact, even if they are recycled at the end of their life.

Myth 2: Solar power is very expensive

Although this was a true statement just a decades ago, the cost of solar panels and equipment has plummeted. As solar technology advances, solar energy production is also increasing significantly, allowing the system to produce more of the overall household electricity. Now that solar electricity has grown nearly exponentially in popularity, solar equipment is mass produced, allowing prices to fall significantly.

A similar phenomenon happened with digital cameras, DVD players, and laptops. Although these gadgets were very costly when they first hit the market, prices have since declined dramatically, making them more affordable for many people. Likewise, solar technology is advancing and becoming more efficient as well.

“There are higher efficiency solar panels available on the market now, which come at a slightly lower price [per watt],” says Nir Maimon, CEO of Sol Reliable, a solar installation and green energy solutions company headquartered in Los Angeles. “Average panel efficiency is now 17%-21%, while previously, it was closer to 16%-17% efficiency.”

At the same time, residential electricity rates have also increased over the last decade, especially in certain areas of the country. The financial performance of a solar system is largely dependent on the cost of electricity that a homeowner would otherwise pay. Today, solar energy systems have never been as affordable, or a better investment, especially in certain markets.

Myth 3: Solar panels don’t generate much electricity during the winter

When the temperature of the solar panels is cooler, they can generate more renewable energy. Image Credit: Bernhard Richter / Shutterstock

Unless you live on the North or South Pole, solar energy systems typically generate a lot of electricity during colder weather, unless they are covered by snow or ice. Despite the angle of the sun being lower in the sky and the days being shorter, solar energy systems can generate significant amounts of electricity throughout the winter months.

This is because solar panels use light, not heat, to generate electricity. When the temperature of the solar panels is cooler, they can generate more renewable energy. Once they reach temperatures around 32 degrees Celsius or 90 degrees Fahrenheit, solar panel output starts to decline. Since panel temperatures are roughly 20 degrees Celsius warmer than ambient temperatures, these temperatures are commonly reached in most climates. 

Myth 4: Solar technology is not reliable

Solar PV systems are very reliable and durable throughout its 25 to 30 year design life, requiring few if any repairs. Of course some of this depends on the components by specific companies, as some solar panel and equipment companies offer higher quality products than others. 

Solar panels are manufactured to handle extreme weather, including medium-sized hail and falling branches. In fact, the EU Energy Institute found that 90% of solar panels last for 30 years or longer. Because solar electricity is so reliable, it is frequently used to power vital systems, including railroad crossing signals, construction safety signs, aircraft warning lights, and navigational buoys.

Myth 5: I will be off grid and store solar energy in batteries

Most solar homes are still connected to the power grid, for financial and environmental reasons. Most solar systems produce more electricity than is needed during the day. Being connected to the power grid allows homeowners to feed excess daytime electricity to the grid under a program called net metering. Studies show that an average of 20% to 40% of a solar system’s output is fed to the power grid, where it helps to power neighboring houses. Credits appear on the electric bill for energy sold back to the power grid. During overcast weather and at night, solar homes draw power from the grid.

If a home is located in a remote area away from the power grid, a standalone solar system with batteries may be the most practical solution. There is typically a charge for extending the power grid, which can be thousands or even tens of thousands, depending on the distance and other factors. Sometimes stand alone solar systems are more cost-effective to install than extending the power grid, even when taking the costs and upkeep of batteries into account.

Feature image credit: lovelyday12 / Shutterstock

About
Latest Posts

Sarah Lozanova

Sarah Lozanova is a renewable energy and sustainability journalist and communications professional, with an MBA in sustainable management. She is a regular contributor to environmental and energy publications and websites, including Mother Earth Living, Earth911, Home Power, Triple Pundit, CleanTechnica, Mother Earth Living, the Ecologist, GreenBiz, Renewable Energy World, and Windpower Engineering.Lozanova also works with several corporate clients as a public relations writer to gain visibility for renewable energy and sustainability achievements.

Latest posts by Sarah Lozanova (see all)

Renewable Energy Roundup: 5 Myths About Solar Energy – April 13, 2016
Why One Family Of Four Chose To Downsize To 900 SF – April 8, 2016
Has Solar Energy Technology Evolved? – April 1, 2016

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Renewable Energy Roundup: 5 Myths About Solar Energy

Posted in alo, FF, G & F, GE, green energy, ONA, PUR, solar, solar panels, solar power, Uncategorized | Tagged , , , , , , , , , , , | Comments Off on Renewable Energy Roundup: 5 Myths About Solar Energy