Cost of Solar Energy Plummets

The declining cost of solar energy, coupled with the rising cost of conventional electricity, create a playing field that’s now more level than ever.

| April/May 2012

Sun on Solar Panel

 The cost of a residential solar power system has dropped about 40 percent in just the last two years.  


If you’re thinking about switching to solar energy, now’s the time. Prices have never been lower, and in some areas, PV systems can now produce electricity at a cost that’s competitive with — or even lower than — conventional electricity from coal, nuclear or natural gas.

That’s right — the day we’ve all been waiting for has finally arrived. The cost of solar energy rivals electricity produced by much less environmentally friendly sources. What’s more, the cost of solar power will continue to fall while the price of conventional fuels spirals upward.

The cost of a residential solar power system has dropped about 40 percent in just the last two years. As a result, the lifetime cost of solar electricity produced by these systems now competes with conventional electrical power plants. In places where electricity sells for a premium, it’s competitive even without subsidies. In New Jersey, for instance, conventional electricity costs about 17 cents per kilowatt-hour (kwh). A residential solar power system can produce electricity at or slightly lower than that price, without any incentives.

Families in many major cities are paying 10 to 12 cents per kwh for conventional power, and soon, many in the Midwest will pay up to 15 cents/kwh for conventional power. Meanwhile, in the Midwest, the unsubsidized cost of solar power is about 13.7 cents/kwh, and a 30 percent federal tax credit drives that cost down to 9.6 cents/kwh.

Rebates that are available from some utilities lower the price even more. In St. Louis, Ameren offers a $2 per watt rebate based on installed capacity. A 5 kilowatt system would receive a $10,000 rebate as soon as the system is up and running. This incentive drives the cost of solar energy down even further — to 7.1 cents/kwh. That’s much cheaper than conventional power. In addition, the cost of solar electricity will remain the same for the life of the system — at least 30 years, maybe longer. This provides a tremendous hedge against inflation.

Ameren and other U.S. utilities also are currently buying renewable energy credits from their customers, which help utilities meet state-mandated goals for renewable energy production. Ameren pays $50 for every 1,000 kwh of electricity a solar electric system will produce for 10 years, regardless of the amount of power consumed by the system owner. For instance, if a system is projected to generate 40,000 kwh in the first 10 years of operation, Ameren will pay the homeowner a one-time payment of $2,000. That lowers the lifetime cost of solar electricity to 4.3 cents/kwh.

9/25/2015 11:28:25 PM

I think if the writer of this column would look on eBay, he would see per watt prices of $1.25 - $1.75. Still quite expensive.

4/25/2014 11:09:30 AM

Re checking solar costs now About the global warming, the source of of the increasing heat is of little consequence. Our problems will alway revolve around the insulating effects of excess carbon dioxide in the atmosphere, (primarily from burning the fossil fuels the earth has been storing away for billions of years) Simple really, billions of years of sequestered carbon dioxide released in the last 70 years.

4/25/2014 10:26:16 AM

The Arctic ice is smaller every year. They can now actually ship over the formerly frozen area. Nations in the Pacific have to dump their island countries because the oceans are rising so much. Bird migration is very well documented to be changed based on global climate change. Penguin and Polar Bear populations are plummeting due to the lack of ice. Areas keep getting new record totals of heat units, which keep getting broken every year. These are facts, not opinions. You can try really hard to deny them, but it doesn't make the pollution and excess carbon go away. If you only listen to Fox "news", you might not hear this information. Even conservative Republican politicians are admitting it's happening now. John S PDX OR

James Edward "Ed" Ablard
7/30/2012 6:11:54 PM

I can affirm Dan Chiras for this post. The barriers to solar are being torn down daily. If you haven't shopped the market lately get an attitude like mine that I need my electricity to be uninterruptable for my home and for my business and look again at solar. Dominion my Electric Company is rebating residential bills dollar for dollar now and Northern Virginia Electric Coop is doing the same so you can zero out your bill and then save more money with using D.C. current for gizmos like printers, routers and computers which now convert ac to dc to run their computer chips. I am working on proof of concept to glue my Uni-Solar photo-voltaic panels to the new CertainTeed shingles on my roof. So watch this space for news.

4/28/2012 10:47:03 AM

Do a little reading on your own. and you'll find that ocean acidification, like GW itself, is of minor amount and little impact...Peak oil is a valid concept, but the peak keeps changing as new sources are found. The actual amount of known reserves is faulty because countries tend to lie about their reserves for economic & strategic reasons. There's probably more than they're telling us...Natural gas is almost equivalently useful as liquid fuel for automotive purposes and extremely cheap (right now). US supplies can keep us going without changing our driving habits for more than six more centuries..We should conserve for conservation's sake, not because of some fantasy about co2 invoked by unscrupulous politicians for the sake of controlling the naive thru fear mongering.

4/28/2012 12:49:28 AM

Pure bunk!

Dennis Ingham
4/27/2012 5:09:19 PM

Even if CO2 isn't causing global warming, CO2 IS causing ocean acidification, another big problem! Even if that doesn't faze you, the Pentagon has determined that peak oil happened in 2005 or 6!

4/27/2012 4:59:09 PM

Why bother, global warming is being debunked daily.

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