The Dramatic Drop in Solar-Energy Prices

Reader Contribution by Sarah Kezer and 123solarpower
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The price of solar energy is at an all-time low according to a recent report conducted by the Lawrence Berkeley National Laboratory (Berkeley Lab). Due to lower solar installation costs, improved project efficiency, and a 70 percent decline in purchase agreement prices since 2009, this renewable energy resource has never been more affordable.

Upfront Solar Energy Costs

The average installed price of photovoltaic (PV) devices has fallen by more than 50 percent since 2009, making the initial investment cost of system installations feasible for a much wider range of homeowners and businesses. The Berkeley Lab’s latest “Utility-Scale Solar” report cites that up-front costs have fallen from around $6.3/W in 2009 to $3.1/W for projects completed in 2014.

“By the end of 2020, the amount of installed solar capacity will be 300 percent higher than today,” Dan Whitten, vice president of communications at the Solar Energy Industries Association, said. “Nationwide, it grew 10 times between 2008 and 2015.”

Photovoltaic Efficiency

New solar projects generate electricity more efficiently as well. PV projects performed at an average capacity factor of 29.4% (in AC terms) in 2014, a notable improvement over the 26.3% and 24.5% average 2014 capacity factors realized by projects built in 2012 and 2011, according to the report findings. The improvement is due to better resource areas, and better solar collector fields and tracking technology, which has helped to increase energy capture.

Lower Cost of Solar Power Purchase Agreements

Another piece of this solar energy price puzzle has to do with the drop in solar power purchase agreements (PPA). A PPA is a financial agreement where a solar contractor constructs the design, permitting, financing and installation of a solar energy system on a customer’s property for very little cost. The developer then sells the power generated to the host customer at a fixed rate that is typically lower than the local utility’s retail rate.

This lower electricity price offsets the customer’s purchase of electricity from the grid while the developer receives the income from these sales of electricity as well as any tax credits and other incentives generated from the system (SEIA).

PPA prices have seen a downward price trend since 2006 according to the Berkley Lab report, making solar a much more cost-competitive option for utilities. PPAs are advantageous for both the contractor and homeowner. Developers are typically better positioned to utilize available tax credits to reduce system costs with a PPA.

And since a solar system has been shown to increase residential property values, and long term PPAs can be transferred with the property, homeowners have even more reason to invest in this home improvement strategy with minimal upfront costs.

Benefits of Solar Energy

Solar energy is a major resource in the efforts to reduce carbon emissions and our dependence on fossil fuels, which is thankfully becoming more mainstream every year. With the increased demand for solar systems, consumers have more choices when it comes to choosing a solar power provider at much cheaper prices.

If you’re interested in sustainable energy sources such as solar, you can use a solar savings calculator to estimate how much you would save each year with solar energy.

Sarah Kezer is passionate about helping others take advantage of the power of solar energy. At123SolarPower, Sarah assists in answering questions and providing expert information for users to explore their options when it comes to going solar. 123SolarPower connects individuals with the largest network of solar power providers in the U.S. Connect with Sarah on Facebook and Twitter, and read all of her MOTHER EARTH NEWS posts here.

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