97% of Americans overestimate the cost of going solar. Many people still believe the thinking of 10-20 years ago, that solar is a cottage industry only appealing to niche markets. In reality, solar energy is a booming global industry that is expanding at a dizzying pace. Going solar is a practical solution for lowering monthly home energy bills and doing good by the environment.
No Upfront Costs
The solar industry has evolved with third party companies offering financing that allows homeowners to lease solar panels without putting any money down. These third party companies own, insure, monitor, and maintain the solar panels on the homeowner’s roof. In return, the homeowner pays a monthly rate (also known as a power purchase agreement) over a fixed period of time for the solar energy generated from the panels. The difference between the monthly rate and a traditional utility bill saves the homeowner money every month.
Solar Panel Prices Drop
It’s not just creative financing that is making solar affordable. From 2008 to 2012, the cost of solar panels declined by $2.6/watt, an 80 percent price drop for PV systems generating less than 10kW. Over a greater period of time, from 1976 to 2013, the price per watt fell from $76.67 to $0.74. Over this time period, the falling price of solar has been so consistent that every time solar manufacturing capacity doubles, the price of photovoltaic (PV) cells drops by 20%. This manufacturing and price relationship was originally observed by Richard Swanson, founder of Sunpower, and is now aptly named Swanson’s Law.
With PV prices so low, the majority of the cost of going solar is now non-hardware costs such as financing, installation, permitting, and customer acquisition. Soft costs tend to be lower in markets that have stable and consistent policy toward the solar industry. On a global level, German feed-in-tariff policy has led to a maturation of its solar industry and an almost 50% lower cost to install solar than the U.S. On a national level, cities like Lancaster, California are reducing soft costs by making it easier their citizens to go solar by streamlining permit processing. There have also been numerous companies started in the past few years with the sole focus of reducing soft costs. These companies include Mosaic, Sunible, Sfuncube, and Sungevity.
New Option For Going Solar
Despite the increasing financial accessibility of going solar, not all homeowners are able to do so regardless of financial considerations. Some homes face the wrong direction or have trees blocking the sun. For these individuals a new way to go solar is to invest in solar projects on Mosaic’s online marketplace. Investments on the Mosaic platform offer investors returns of 4.5-7% and tenors of 8-12 years. Sign up to see current solar projects.
This post is part of Mosaic’s New Age of Energy Campaign. The campaign highlights the recent groundbreaking technological and financial developments that have recreated the clean energy landscape. Check out the campaign’s home page to view all of the exciting developments, vote below for your favorite, and be entered into the sweepstakes to win an awesome BirkSun solar backpack.
The New Age of Energy Campaign
Boyd Arnold is a member of Mosaic’s business development team. Prior to working at Mosaic, Boyd worked in investment consulting and has experience starting businesses. He graduated from the University of Colorado and has completed all three levels of the CFA. Boyd enjoys cycling, brewing beer, and baseball.