Solar Pricing's Rapid Decline

Written By Brianna Panzica

Posted September 16, 2011

Solar companies may be struggling to stay afloat in today’s market, but the industry itself is strengthening as falling prices make solar installations fiscally reasonable.

On Thursday, the results of a 12-year study by the Department of Energy’s Lawrence Berkeley National Laboratory were released.

According to the study, installation costs of solar electricity systems fell 43% from 1998 to 2010.

Included in the study were over 100,000 small (under 10 kilowatts) commercial and residential photovoltaic systems across 42 states.  Tax rebates and state incentives were not taken into account.

In just one year, from 2009 to 2010, the price of a residential system fell 17% to $6.20 per watt, reported CNET.  And in the first half of 2011 alone an 11% decline in prices occurred.

The cost of large solar electric systems, over 500 kilowatts, fell even more from 2009 to 2010.  The decline in price these large systems was a whopping 26%.

These price drops are due in large part to the heavy competition in the market.  Chinese companies are leading the panel production, sending at least three American companies into bankruptcy.

And even these Chinese companies are struggling amid falling prices and tough competition.  Just this week Jefferies (NYSE: JEF) downgraded three Chinese solar companies.

The U.S. provides the fourth-largest market in the world for solar electric systems, following Germany, Italy, and Japan.

But recent debt issues in Europe have tightened the demand in Germany and Italy, forcing some companies to push prices down just to increase panel orders.

The U.S. is still providing a good market, although falling prices are being counteracted by the expiration of many government incentives this year, says CNET.

Even though industry efficiency rather than incentives is the force behind the influx in falling prices, the reduction of incentives will still most likely slow the price decline for the second half of 2011.

Which means that for many Americans, now may be the best time to invest in a solar electricity system.

That’s all for now,


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