For years the sustainable business of solar energy has been regarded inthe US as an environmentally attractive but relatively expensive energyoption, likely to remain much more expensive than fossil fuel basedenergy for quite some time. However that may be changing, as the priceof solar installations continues to drop. Meanwhile fossil fuels likecoal and oil are likely to grow more expensive over the long term—though a certain amount of fluctuation in prices is inevitable. A newly released report confirms that in 2009 the price of installing solar power in the USreached a record low. The authors also seem confident the trend willturn out to have continued through 2010 and beyond.
In "Tracking the Sun III: The Installed Cost of Photovoltaics in theUnited State from 1998-2009" researchers from the Lawrence BerkleyNational Laboratory document a trend of gradually declining prices forsolar installations spanning more than ten years. Since 2008 alone, thereport finds the average cost of photovoltaic solar installationsdropped 24% in 2009, to $4.10 per watt. Part of the reason for thedecline in prices can be attributed to state and federal incentiveprograms that encourage sustainable business. For example state orfederal level tax breaks for solar projects make installations lesscostly for homeowners or businesses who take advantage of them.
Interestingly, the study finds residential solar installations tended to be less expensive than either commercial or public sector solarprojects in 2009. On average, the cost of installing a watt ofresidential solar power was $0.5 less than for a watt of commercialsolar, and $1.1 less than for public sector solar projects. Anotherimportant point is that a drop in the cost of solar module productionseems to have been passed onto consumers more quickly than expected—anencouraging sign indication that government sustainable businessincentives will trickle down quickly to people hoping to be able toafford a home solar installation.
So what’s next for the sustainable business of solar power in the United States? Preliminary findings from this year show that in the first tenmonths of 2010, installation costs fell 14% compared to 2009. The newreport also notes that there likely remains potential for prices to drop still further. Other countries like Japan and Germany have had evenmore success reducing the costs of solar projects than the United States has so far achieved. Continued state and federal support for solarenergy will be essential if the price decline is going to continue.
Much remains to be done when it comes to growing the solar industry inthe United States. The next great step for the US may be implementing anational feed-in tariff system that guarantees homeowners who installsolar projects the ability to sell excess power back to the grid. Byworking to bring down the cost of solar power still further, state andfederal policymakers can help shift the country to a clean energyeconomy while creating green jobs and providing homeowners with a way to generate low-cost electricity. The newly released report from theLawrence Berkley National Laboratory suggests support for the solarindustry will pay off quickly, and prove to be a truly effectivesustainable business investment.