Solar panel costs continue to decrease

Published by The Editors | Filed under photovoltaic

The cost of a solar panel installation continues to fall, which is good news for homeowners looking to install a home solar power system. The cost decrease is due to an increase in solar panel production, especially in China, and a decrease in solar panel demand, especially in Spain.

For solar shoppers these days, the price is right. Panel prices have fallen about 40 percent since the middle of last year (2008), driven down partly by an increase in the supply of a crucial ingredient for panels, according to analysts at the investment bank Piper Jaffray.

The price drops — coupled with recently expanded federal incentives — could shrink the time it takes solar panels to pay for themselves to 16 years, from 22 years, in places with high electricity costs, according to Glenn Harris, chief executive of SunCentric, a solar consulting group. That calculation does not include state rebates, which can sometimes improve the economics considerably.

While the U.S. federal solar energy incentive has been increasing, with the removal of the tax credit cap, state and local incentives have been decreasing. Still, the solar panel price decline is so far making up for those decreased incentives. Creative financing options have also led to increased home solar panel installations.