Look for even lower solar panel prices in 2011

Just when you thought the news about solar power couldn’t get any brighter!  Prices for solar panels have fallen by more than 1/2 over the past few years, and now experts believe that the costs will be even lower this year.  In order to compete with companies in China and Taiwan, U.S. solar manufacturers have slashed prices.

With bargain basement costs and generous government rebates and incentives, more and more consumers are going solar these days.  As a result, solar cell production is ramping up across the United States to meet solar energy demand, expected to double in 2011.

All this news should be very welcome by homeowners and small businesses.  After all, solar panels used to be out of price range, but are now available for realistic budgets.

Just how cheap will solar panels get?  Currently, wholesale solar panel prices are at about $1.50 per watt.  Experts believe that the costs will fall another 20% by the end of the calendar year.

With as much as 30% of the cost available as a solar tax credit, its time to maximize savings  – both on solar panels and monthly electricity bills!  Its amazing to consider the fact that solar energy installations doubled in 2010 (its now at about 1,000 megawatts).  In the next twelve months, solar energy demand is expected to double again, to 2,000 megawatts in 2011.

Solar panels 50% more affordable

What a difference a year makes!  Solar panels are up to 50% more affordable now than they were 12 months ago. Add to that price differential the generous government incentives and tax rebates, and people are finally thinking that it may make sense to go solar. How would it feel to have free electricity each month? And, you’ll be able to guard against future rate hikes too!

The cost of solar panels does vary from state to state, depending on the market.  While some areas are enjoying a 50% drop in solar panel prices, other regions are still experiencing at least a 40% reduction in retail cost.

So what has driven the price drop?  Analysts at the investment bank Piper Jaffray notes that an increase in supply of polysilicon, which is an important element for solar panels, has had the effect of lowering prices.  The combined effect of lowered prices, plus federal and state rebates, has reduced the ROI (return on investment) time period to about 13-15 years (not including calculations of increased utility rates and improved home value as a result of renewable energy installations).  Oh, and don’t forget the green factor!

The increased supply of polysilicon has been flowing from China and other countries.  A recent New York Times article examined this supply/demand effect:

“A ton of production, mostly Chinese, has come online,” said Chris Whitman, the president of U.S. Solar Finance, which helps arrange bank financing for solar projects.

Not only did the supplies increase, but demand dropped – at least in Europe, which has been the largest solar market.  Chalk that up to the economic crisis in Spain, which cut its subsidy for solar panels last year due to budgetary concerns.

Solar panel prices are declining

If a 40-50% drop isn’t enough for you, solar panel prices are projected to continue to decline.  And that bodes well for consumers, as well as manufacturers!  This is because, as more people install solar panels on their properties, their friends and neighbors will become interested in doing so, too.  Once solar becomes more of a “norm,” perceptions will change and others will consider investing in solar.

To quote one of my favorite sayings:  All ships rise with the tide.  In other words, more people installing solar panels helps the solar industry, as well as consumers!

How might the fact that solar panels are 50% more affordable help you?  Consider this example, from the New York Times article:

“Mr. Hare in Texas cited the larger tax credit, which sliced about $23,000 from his $77,000 bill, as a major factor in his decision to go solar, in addition to the falling panel prices. Sensing a good deal, he even got a larger system than he had originally planned — going from 42 panels to 64. The electric bill on his 7,000-square-foot house and garage has typically run $600 to $700 a month, but he expects a reduction of 40 to 80 percent.”

Have you been considering solar panels?  Now might be the time – before tax rebates and incentives are slashed, and while prices are low!