Solar Costs continue to Drop - More People Adding Solar

Costs to install solar panels declined sharply in 2010, as much as $1 per watt, thanks mainly to a reduction in the cost of panels, which finally overwhelmed rising labor costs.

Already - with a just a fraction of the incentives given to oil companies solar tax incentives have cut the residential cost of solar panels to nearly the same level as commercial installations, $4.10 per watt vs. $4.

How bad are US panel manufacturers hurt by these price cuts? First Solar saw its operating margins drop from about 32% to about 26%.  Premium-priced outfits like SunPower are getting hammered  by Chinese makers of lower-cost panels - but on the other hand their efficiency is still the best available.

What's happening is that solar panel production is scaling. Manufacturing efficiencies are dropping costs worldwide and while that hurts small American producers in the near term, it means lower costs for solar energy overall for consumers and a premium on bringing technology breakthroughs to market.

In short, solar is growing up. It's becoming a real industry, where prices are determined less by government and more by market forces. This is good news. It means advances in the durability and efficiency of solar will go directly into production, as American companies are already hungry for them. Which will drive prices still lower.

There is  another potential driver of lower costs. Non-module costs, installation costs, are still too high. Standards are a key to driving down installation costs. If we have global standards for panel sizes, for connectors, and for installation procedures, we can lower final costs significantly.

What does this mean for you?   Energy costs from fossil fuels keep increasing while energy costs from solar keep decreasing.    Solar is paying for itself ... and when the lenders jump on the band wagon, as they have in Germany and other markets -- you see continued and sustained growth in installations.

Already in several markets around the world - solar energy costs less to produce than other sources of energy, and like cell phone technology vs land lines (i.e., grid based) will be adopted rapidly.

Meanwhile -- millions are being pumped into solar research and there are a lot of promising new materials and technologies which will see costs drop lower, efficiency increase, and even make it possible for you to spray your windows and produce solar energy using new organic technologies (already demonstrated).   Very exciting stuff.   To learn more read our reports on solar research.