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Costs on Solar Panels Dropping Below $1 Per Watt

solar energy savingsDetractors of solar energy often cite manufacturing costs as one of the downsides to free and clean solar energy. If we’re honest about it and do the math, we realize that the return on investment (ROI) of a solar PV array, which may take about four to five years to pay for itself on a typical residential home, may not be as financially attractive without local incentives and federal tax credits. However, these credits do exist, making solar a smart financial choice not just for the environment, but for your wallet as well.

In the near future, however, the picture is set to get even brighter. As the cost of solar panels drops to below $1 per watt, solar energy becomes an even smarter financial choice.

Moore’s Law: It Applies to Solar Energy, Too
Maybe you’ve heard of Moore’s Law. If not, here’s a quick history lesson: Intel co-founder Gordon Moore published research showing that the number of circuits that could fit on a single computer chip would double every two years — in a nutshell, making computers smaller, faster, and less expensive. Back in 1965, Moore predicted this trend to continue for at least 10 years. It looks like it’s continuing indefinitely, and the computer industry shows no signs of technology developments slowing down.

The same thing is happening in the solar industry. The price of solar panels has declined at an annual rate of 7 percent. And, like computer chips, they are also getting smaller  and more efficient with the introduction of thin-film solar panels. (Read more about that tomorrow.)

According to statistics from the National Renewable Energy Laboratory of the U.S. Department of Energy (highlighted in these graphs from Scientific American magazine), the price for solar PV panels has dropped from $22 in 1980 to less than $3 in 2009. Here in 2012, solar PV manufacturers have broken the $1 threshold and are now manufacturing thin-film panels for just under a dollar (cost), which are almost twice as efficient as previous generations of solar PV panels. This price, of course, does not include distribution and installation costs.

Approaching Grid Parity: One More Reason Solar Is Smart
At the current rate of technological developments, the cost of solar energy will approach the cost of using coal for electricity within the next 10 years, according to many renewable energy experts.This concept — the point at which the price of solar equals the price of electricity generated from coal and other fossil fuels — is called “grid parity.”

The price per kilowatt hour for solar electricity is currently about 20 cents. The national average for conventional electricity is about 12 cents. The solar tipping point — that time when we achieve grid parity — is approaching rapidly. The Scientific American article guessed that grid parity is a possibility within 10 years at the current rate of solar technology development. If electric prices rise sharply in the next few years, we’ll reach grid parity even sooner than research seems to indicate.

What does this mean if you are considering a solar PV installation for your home? If you do it now, you’ll start saving money right away. If you do it later, you’ll save money later.

Once we reach grid parity, there will be no reason for anyone to not use clean, affordable solar energy to power their home or business. But there’s still time to join the early adopters.

Why not get your free solar savings report and see how solar can work for you today?

Post Written by
A full-time freelance writer, Dawn frequently covers energy efficiency, green living, and topics like LED lighting and whole home control systems for a number of blogs and technology trade magazines. Dawn is proud to live in New York as the state vies to beat out New Jersey as the East coast top dog of solar energy and is waiting for the Solar Renewable Energy Certificate legislation to pass before installing solar panels on her Long Island home.

1 Comment

  1. Josh says:

    PV at 20 cents/kwh seems awfully high. Here in sunny California, when you include government incentives and grid-tie credits, we can achieve installed PV at $0.06/kwh. Financing groups like Solar City will now install a PV system on your house for FREE, and guarantee you 20% cheaper utility rates for 25 years (while they pocket a healthy margin). In less sunny spots, PV now nets lower than $0.12/kwh — and PV prices will continue to fall dramatically into 2020-2030.