NY Times: More Sun for Less........

NY Times readers have been forwarding me the August 26, 2009 article, “More Sun for Less: Solar Panels Drop in Price”. Many thanks to Sarah, Pete, and Richard who passed along links!

Solar panels are often the most expensive component of a PV (photovoltaic) system. The drop in price is really a big deal. The drop is being driven by a glut of panels on the market. Demand serves to keep the cost of these panels up. I run into a lot of folks who like to postulate that price will come down as more folks buy the technology. I find this outlook to be a bit jingoistic. They assume that because no one on their cul-de-sac has solar panels that this must be a fledgling industry suffering from an inability to mass produce a product. To understand the economics that drive the cost of solar technology you have to look beyond the borders of the U.S. Europe and Asia drive this market. The U.S. is a solar backwater.

Less than 35% of GE PV panels were slated for the U.S. market in 2006

The NY Times article highlights the cessation of solar incentives in Spain as one reason for the glut in PV panels. Spain has chosen to stop incentivizing solar just as the U.S. is beginning to ramp up its incentives. Of course, Spain’s decision isn’t the only causative agent, the beleaguered global economy is also driving the drop in price. The price drop and the increase in U.S. incentives may be just the formula to help popularize solar in the States. That is exciting!

So how much cheaper are solar panels? I disagree with the Times perspective that reports a 40% decrease in cost. What I’ve seen is a drop that ranges between 11% - 20%. Not bad. Eventually I think the cost will come back up. As more homes and businesses in the U.S. step up to produce their own clean power demand for panels will increase. I imagine we may rapidly see a rebound in price, but in the meantime this is an outstanding opportunity to combine low prices with state and federal incentives and “go solar.”