Solar Panels Decreasing in Cost

Solar Panels. Image: Earth Policy Institute.

A few years back, the cost of solar panels were prohibited expensive. These were things that the average owner, no matter how green or environmentally conscious, could afford to install. A number of driving social, economic and technological factors allow for a cost decline that will allow for more mainstream usage. According to the Earth Policy Institute, since the mid 2008, solar panel costs have decreased by 40%.

The interest in solar panels has always been there as it allows for clean and renewable energy. But previously people have hesitated to use them as it is a new, expensive and unproven technology. The challenge had always been to make it cost effective and efficient. Janet Sawin of Worldwatch, an environmental think-thank notes that “there are two major trends that will accelerate the growth of solar photovoltaic (PV): the development of advanced technologies and the emergence of China as a low-cost producer.”

These producers are able to build capacity and increase the economies of scale. According to the 2009 Eco-Economy report on solar panels by the Earth Policy Institute, the global production of PV cells have increased 51% from 2008 to catch up to demand. From 2007 to 2008, there was an increase by 89%.

Aside from price decreases from mass production, there are many governmental programs encouraging the use of environmentally friendly products. Governments around the world are providing incentives to purchase solar panels such as a feed-in tariff, guaranteeing homeowners, firms and utilities a certain price for each kilo-watt they produce. Incentive programs have been adopted by 50 countries including Canada and the Deutsche Bank estimates that these tariffs have led to 75 percent of worldwide PV installations as of 2008, including both large scale utility and small residential projects.

As well, technological advances have allowed for new more efficient solar panels. Supply shortages have lead to new technologies not requiring as much purified silicon and are less expensive to manufacture.

Technological advances have also increased the lifespan of solar panels from 20 years to 30 years. This makes it more appealing to investors in solar panels. The expense is from the initial cost equipment and the installation, and over time there should be no additional costs as energy use will essentially be free.

Governments, individuals and producers are pretty keen on clean, cheap energy. Europe is hoping to have half of its electricity delivered by solar energy in 2020. All this frenzied activity will reduce the prices of solar panels even more and allow more companies and individuals to benefit from energy savings.


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