Reports indicate that solar energy systems will become the cheapest source to produce clean energy power in many countries over the next 15 years. The cost of installing solar panels at solar farms and on rooftops will drop 60% to an estimated average of around four cents per kilowatt hour by 2040.
Almost all of the falling costs of solar from the mid 1990’s until now were due to technology and manufacturing improvements along with government support. The future reduction in cost in solar will come from what the industry calls “soft costs” such as selling solar projects, financing and permitting. The low costs of solar panel technology will be enough to outpace new energy production from fossil fuels.
Solar power is growing at an unprecedented rate of 43 percent. The plummeting cost of solar energy is fueling a boom in popularity. The goal is to reduce the cost of solar energy to $.06 per kilowatt hour by 2020, and this appears to be very reachable goal at this point.
Considering the force of these contributing factors, now is the time to install a solar panel system to your home or business. Let’s look at some of these factors in order to gain a deeper understanding of price trends and how they impact the solar energy market.
1. Advances in Solar Technology. Advances in solar technology include improved efficiency of solar panels and greater overall energy production of the system. Some other associated costs are reduced by greater efficiency, such as racking system equipment, installation, and transportation costs. Better efficiency fuels greater opportunities to sell more solar generation capacity.
2. Reduction in Manufacturing Costs. Solar panels, inverter costs and panel racking costs have come down at a steady pace yearly, resulting in large declines over time. Manufacturing efficiencies and fierce competition among manufacturers have contributed to this decline.
3. Solar Investment Tax Credit. The Solar Investment Tax Credit has offered a significant incentive for installing solar energy systems, for both residential and commercial solar panel systems. It was created to support the rapid deployment of solar energy until it becomes competitive. The incentive offers a 30 percent tax credit for both residential and commercial solar energy systems. The credit will be in effect until 2023, tapering off over time.
For residential solar systems, the tax credit is a dollar-for-dollar reduction in the federal income taxes owed by the homeowners by 30 percent of the installed cost of the solar panel system. This is not a tax write-off and is more valuable to the taxpayer.
More people will go solar because of the lower the price and greater efficiency of a solar system and the shorter the payback period. The important reasons listed above explain why now could not be a better time to invest in solar for your home or business.