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.  
  • Cost Of Solar Energy Graph
    The cost of solar energy rivals electricity produced by much less environmentally friendly sources.

  • Sun on Solar Panel
  • Cost Of Solar Energy Graph

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

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