The Price of Solar Is Declining to Unprecedented Lows

http://blogs.scientificamerican.com/plugged-in/the-price-of-solar-is-declining-to-unprecedented-lows/

by tedsanders • 10 years ago

276 164 10 years ago

blogs.scientificamerican.com

danmaz74• 10 years ago

Interesting:

The continued decline in total installed cost is noteworthy considering the fact that the price of the solar panels (or modules) themselves has remained relatively flat since 2012. This means that the decline in installed cost observed since 2012 was largely caused by a decline in the cost of the inverters that convert the DC power produced by solar panels to AC power for the grid and other “soft” costs such as customer acquisition, system design, installation, and permitting.

allendoerfer• 10 years ago

Consolidation.

nnain2• 10 years ago

That's right. A friend, here in India is making a decent income by selling accessories - connectors, wire(sun/heat resistant), batteries etc. Importing Solar panels in India or manufacturing is still with the bigger players. But accessories is easy to get in. Also companies providing installation services aren't all that profitable, because cost of labour is cheap here and the margins are low. In installation you're basically only playing in the 15-20%% of a crowded market. But if you consider the over manufacturing capacity of China, accessories import/export/manufacturing remains a lucrative segment of the business.

jandrese2• 10 years ago

I'd believe it. I priced out a solar install a few years ago and they were straight up ripping you off on the inverter and the install costs. There was a lot of room for movement in that area.

deepsun• 10 years ago

Not a word about subsidies on solar power. Has anyone got any data on raw cost of solar power, without taxpayer's subsidization?

pmuk• 10 years ago

The subsidies tend to come back as payments for the electricity generated so the installed costs will be the same as in the article. I installed a 16 panel, 4 kW system on my roof in 2012 for around £10,000 - and receive a subsidy of around £0.45 per kWh generated.

_ph_3• 10 years ago

The article was talking about the raw, unsubsidized costs of solar. It is now on a level, where it can compete on a price basis with conventional energy production. And that does not count in the hidden costs of coal/gas/nuclear as their environmental impact rarely gets accounted for.

Here in Germany, rooftop solar electricity costs about half of what the utility companies charge off the grid.

ptaipale3• 10 years ago

... because utility companies have to collect a price that covers the subsidies going to solar and wind producers, required by law.

the_why_of_y• 10 years ago

I agree, subsidies are very important to discuss! For comparison, some IMF researchers claim that fossil fuels are subsidized by $4.8 trillion per annum (that's more than 5% of global GDP):

http://www.imf.org/external/pubs/cat/longres.aspx?sk=42940.0

_ph_3• 10 years ago

This is great news, there should be a large push now to base large parts of the grid on solar (and of course wind). Not accounted in the costs of conventional power generation is all the environmental impact - factoring that it, solar probably is already cheaper.

Another seldom mentioned fact is, that solar plants don't have a minimum size. So for large regions in Africa, where there is no grid yet, it is much easier to set up isolated small solar plants in villages than to construct a whole grid.

gaius2• 10 years ago

There is environmental impact in solar too - the manufacturing processes for photovoltaic cells aren't exactly clean, the raw materials still need to be sourced, installations spread out over mile after mile need vehicles to maintain etc etc.

But the real elephant in the corner of the room is that there is no really good method yet for buffering power generated by solar by day, for consumption overnight, when it is needed for lighting, heating, cooking, etc. A conventional station doesn't care what time of day it is. THAT is the barrier to widespread adoption, and it's one that solar proponents always seem to overlook...

nl3• 10 years ago

I'll keep posting this until I see someone else on HN posting itbtoo: Flow batteries are here now, cheap, and work well. They don't have the power density of the Tesla batteries, but for residential and light industrial use they work well.

makomk• 10 years ago

So basically rooftop residential solar isn't going to be economically viable any time soon - it's more or less bottomed out and is still much more expensive than conventional generation and utility-scale solar, and the latter has further potential for cost reductions.

pmyjavec• 10 years ago

How did you come to that conclusion? Actually just curious.

It seems like there could be a really big difference between the cost of conventional power between Australia and the US if what you're saying is true.

maxerickson7• 10 years ago

US residential rates average $0.13.

https://www.eia.gov/electricity/monthly/epm_table_grapher.cf...

Looks like they are ~$0.23 (that's US dollars) in Australia.

I guess the sun is better in Australia too.

_0w8t• 10 years ago

Rooftop is viable if one accounts for a possibility of future price hikes or disasters that leaves the house without grid for substantial amount of time. Essentially one treats the extra cost as an insurance premium.

DougWebb3• 10 years ago

You can justify the cost of anything if you compare it to a made-up scenario where having the thing is far better than not having it. That's just rationalizing; it's not a valid analysis.

Gibbon1• 10 years ago

Thing to consider is when you compare costs you need to compare against the alternative sources at the particular point and time where solar power is injected.

A lot of times you see solar prices compared with base load power prices, but solar competes actually with natural gas[1] fired peaking plants which sell power at higher prices than a coal fired plant.

Similarly residential users are charged a substantially higher price for electricity than the base load price. Partly because a substantial amount of power comes from peaking plants and because the utilities have a grid to maintain[2].

[1] If you wonder why the Koch brothers hate solar remember they are in both the oil industry and the gas industry. Little of the former is used for power generation where peaking plants use lots of natural gas.

[2] Utilities hate roof top solar because it messes with their economics because their bond payments and maintenance costs are fixed.

deftnerd2• 10 years ago

Why do you place solar with peak-load technologies like gas? The point of peak load plants, and why they charge a premium, is that they can ramp up output when there is sudden demand. Solar does not have that ability, just like coal and wind.

nnain2• 10 years ago

It'll take a few years, even the suppliers are not focused on residential rooftops (atleast in India). Although several state govt's regulations that industries of a certain size need to use solar energy is encouraging growth in that segment. Residential rooftop installations will take at least 2-3 years and govt incentives, to pick up. But the market is moving for sure!

pjc504• 10 years ago

It's viable with the right subsidy regime, as are all the power sources once they're made to deal with their externalities and variances. http://www.bbc.co.uk/news/business-27142377

known• 10 years ago

"If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it." --Reagan

amelius2• 10 years ago

So why aren't utility companies installing solar panels on my roof just yet? Why is the upfront financing of solar panels still a problem?

daurnimator2• 10 years ago

because you mainly need power when the sun isn't shining. Once you add in costs of electricity storage it's not economical.

pjc504• 10 years ago

Not really, you mainly need it during the day for commercial demand. At the moment we're still in the phase of "negative demand" in almost all countries, where there's no question of storage and it just manifests as the ability to turn fossil power stations off. The UK has at the moment turned off most of its coal generation capacity for the summer.

(Is there a US equivalent of http://www.gridwatch.templar.co.uk/ ?)

imtringued• 10 years ago

Here is a live graph of power production/consumption in germany. You should take the prediction for the rest of the day with a grain of salt though.

https://www.agora-energiewende.de/en/topics/-agothem-/Produk...

ctdonath• 10 years ago

My biggest electricity draw by far is air conditioning when the sun is shining.

crdoconnor5• 10 years ago

Solar panels are loss-making for utility companies. If you have them on your roof you're not only not consuming their electricity and not paying their margins, they might have to pay you.

Worse this usually happens during the times when they make the most profit (daytime/summertime).

They have every incentive to try and kill solar - which is, in fact, what they've been trying to do (google for 'ALEC solar' to see how).

amelius2• 10 years ago

Ok, so why aren't other companies financing them upfront?

forgetsusername• 10 years ago

They have every incentive to try and kill solar

Maybe where you live. But most places in the world, power generating utilities are publicly owned and price regulated and the incentive is to reduce costs. No corporate conspiracy here, and still no solar panels.

Spooky232• 10 years ago

Many places divested transmission from generation. The transmission people don't care, and the generators want to maximize return on their assets.

prostoalex• 10 years ago

Because it's more cost-efficient to build and maintain a giant solar farm https://en.m.wikipedia.org/wiki/List_of_photovoltaic_power_s...

jasode2• 10 years ago

The article emphasizes that the declining price is due mostly to peripherals & installation rather than any scientific breakthroughs of the solar panels themselves. The following quote is key:

"This means that the decline in installed cost observed since 2012 was largely caused by a decline in the cost of the inverters that convert the DC power produced by solar panels to AC power for the grid and other “soft” costs such as customer acquisition, system design, installation, and permitting."

On another note, calculating the payback of residential solar panels is tricky because many online calculators don't consider:

  - inverters failing and needing to be replaced (~10 years?)

  - bank of backup batteries need to be replaced (~10 years?)

  - significant increased labor costs of replacing the roof or repair roof leaks (roofers must spend extra time unmounting all panels before replacing shingles or tiles.)

  - paying a service to clean the panels if the house is in a dusty climate and the homeowner doesn't want to climb on the roof and do it himself

One can lump all those negative costs into one bucket called "ongoing maintenance" to simplify things but nevertheless, it doesn't seem like many ROI calculators properly account for them.

(That said, some people pay the premium for solar panels to gain power autonomy which overrides any over-optimistic estimates of installation payback.)

crdoconnor5• 10 years ago

The article emphasizes that the declining price is due mostly to peripherals & installation rather than any efficiency breakthroughs of the solar panels themselves.

Over the last few years racks, mounts, wiring, inverters and labor have made up ~60% of the cost.

Plus, Obama started slapping ~30% tariffs on the cheapest imported solar panels.

Godel_unicode3• 10 years ago

Not sure why you're being downvoted, I assume the ~20℅ anti-subsidy rates plus the individual anti-dumping rate referenced in the below article are what you're referring to?

http://www.bloomberg.com/news/articles/2015-07-09/u-s-impose...

jakub_h7• 10 years ago

In the US, I'd image tariffs on panels having a much lower influence then elsewhere in the world. Even if panels were completely free in the US, a US-based residential solar system is going to be more expensive to install than even European ones (including European panel costs).

pjc504• 10 years ago

Stick with a grid-tie system for the time being, especially if you can get the right feed-in tariffs. I don't really see the case for domestic storage systems yet.

RobertoG• 10 years ago

I suppose you mean the 'economic case'. Some people is doing it for other reasons, as is frequently the case for early adopters of any technology.

brightball3• 10 years ago

The biggest market for domestic storage is people who would want an emergency generator anyway. You get most of the same benefit for a lower cost with a Powerwall (if the expectation is temporary outage tolerance).

IMO that's the best comparison for domestic storage though.

fencepost• 10 years ago

I suspect that one reason for a domestic storage system would be having solar in one of the states where the power companies have imposed punitively high charges for tying to the grid.

Kenji• 10 years ago

Not only that, but it's not uncommon for panels to crack. Kids throwing stones or balls, weather-related, etc. Replacing the glass is often difficult or expensive. Alternatively, you can fix it but that will often reduce the clarity and thus the generated electricity.

toomuchtodo3• 10 years ago

Panels are sturdy enough to withstand 4 inch hail and hurricane winds if properly mounted to a roof or concrete ground support.

sandworm1013• 10 years ago

You have a good point re roof penetrations. There are too many cowboy solar installers casually drilling holes thinking a blob of silicon is enough to seal out the rain. Also, when you eventually want to replace the roof handling and reinstalling the panel probably doubles the labour costs.

jandrese2• 10 years ago

My thought is that you would install the solar panels when you're replacing the roof. Put 30 year panels on a 30 year roof. 30 years later you get to do it all over again, but at least you're not removing and reinstalling the panels when you replace the roof.

secabeen• 10 years ago

This was a reason I put solar in after installing a standing seam metal roof. The roof will last 50+ years, and the solar just clamps onto the seams. Only penetration is for the cables to the inverter.

tsjackson2• 10 years ago

Inverter failure is real, but the industry standard has risen to 12 years for string inverters, and 20-25 for micros. Even for string inverters, most of the residential/small commercial market has moved to using optimizers for voltage regulation, which means the inverter itself is a lot lighter weight/cheaper.

Backup batteries are still relatively rare, as they should be - they are fairly expensive as backup power. Most systems remain grid tied. Smaller systems don't require retail net metering for a solid payback, since almost all of the energy is used as it is produced.

Roof repair is again, real, but not as likely as you might think. Asphalt shingles under an array are protected from wind, and even more importantly, heat. They degrade at half the rate of the rest of the roof. Assuming 12-15 years for roof replacement, you will hit the module warrantied life of ~25 years before you need to replace the roof underneath the array.

Cleaning the panels really only comes into play when the pitch of the roof is relatively shallow (3 on 12 or shallower). Otherwise rain will clean them fairly well. A lot of people won't have any trouble walking such a shallow pitched roof, and will simply hose the panels off once in a while.

Also, in general, the price of modules per watt is about half of what it was 5 years ago. Peripherals are a major component of the improved economics, but module prices themselves have mattered just as much.

ChuckMcM• 10 years ago

   > On another note, calculating the payback of 
   > residential solar panels is tricky because many
   > online calculators don't consider (stuff...)

Sometimes they do, we installed Solar in 2003, we replaced a failed inverter in 2016. At the time we installed the system we got a new roof with asphalt shingles (50 year roof) which both helped the roof load (they were lighter than the previous wood shake) and was a time period longer than the payback period for our panels.

codecamper• 10 years ago

If you liked the sound of this article, there is even better news:

* solar panel prices have dropped a whole lot in 2016 already. Chinese PV panels now cost about 43 cents a watt. Production costs are around 37 cents a watt. (that's for Jinko Solar)

* utility solar is seeing improvements in construction (more robots), cable management, medium voltage something or other at the power plant, etc.

* China PV makers are moving to PERC and maybe more to Mono. This means a little more efficiency. First solar supposedly has their CdTe response.

* be careful before you go and invest in solar. (FSLR, SPWR, JKS, CSIQ, JASO) As I learned, there is a coming shakeout in 2017. The long term extension of the ITC in the US ironically caused a slowdown in deployment b/c utilities are no longer under the gun to receive the ITC. China also lowered their subsidies for the second half of 2016. Meanwhile PV makers increased production.

Filligree• 10 years ago

* solar panel prices have dropped a whole lot in 2016 already. Chinese PV panels now cost about 43 cents a watt. Production costs are around 37 cents a watt. (that's for Jinko Solar)

However, a 140-watt panel would cost me 362 dollars back home, which is 250 cents per watt: http://www.sunwind.no/product/show/?id=1297

Where exactly are these oh-so-cheap panels supposedly sold?

beefield2• 10 years ago

The usual place:

http://www.aliexpress.com/item/solar-panel-12v-50w-poly-2-pc...

reportingsjr• 10 years ago

If you want good prices you need to buy a whole pallet or more of panels: http://sunelec.com/solar-panels

grecy2• 10 years ago

Renogy has 100W panels for $145 stateside https://www.renogy.com/renogy-100-watt-12-volt-polycrystalli...

jakub_h7• 10 years ago

140 W is probably not the cheapest-per-watt panel format.

Why don't you visit Germany with a van?

pjc504• 10 years ago

I tried the first hit on UK ebay and got £105 with free delivery ($137, almost exactly one dollar per watt) http://www.ebay.co.uk/itm/NEW-140W-12v-Energy-Solar-Panel-Po...

There must be cheaper panels available in the US.

dshipper• 10 years ago

I'm very interested in reading more about your last point. Where did you hear about this shakeout? Will it affect companies had invest in solar projects like Wunder?

subtenante4• 10 years ago

Chinese PV are made in a country where electrcity is mainly produced with coal. All construction carbon emission taken into acount, they need around 30 years of use to get carbon neutral, generally more than their expected life time. This is not sustainable at all yet.

sfifs• 10 years ago

That country needs to move away from coal as fast as possible for public health reasons and know it. So they'll build massive production capacity anyway irrespective of carbon neutrality etc. (and we in the rest of the world will benefit)

China already has the biggest hydro electric project and I to see massive installations in China for Solar, Wind and Nuclear to combat their air pollution and health problems

maxerickson7• 10 years ago

What study says that? These fliers both say less than 5 years for energy payback (as little as 6 months...):

http://www.nrel.gov/docs/fy04osti/35489.pdf

http://www.clca.columbia.edu/236_PE_Magazine_Fthenakis_2_10_...

It doesn't make any sense that China would be subsidizing their panel manufacturers to the extent you are implying.

gakada• 10 years ago

You're not taking into account future emissions. If everybody stopped buying PV cells from China, that would severely retard the development and rollout of PV, and so cause more emissions.

CydeWeys• 10 years ago

You can easily determine that this isn't true on first approximation by multiplying the rated output of the panel by thirty years, and dividing that by the price of electricity. It's well more than the panels are selling for. It wouldn't make any sense for them to sell for so low, so they aren't. It'd be like claiming that the raw materials that go into a $20K car cost $100K. Obviously, they don't.

rz2k• 10 years ago

Re: investing in solar producers and a coming shakeout

This makes me think of some interesting structural economic issues I hadn't considered before.

Compared to the global distribution networks of hydrocarbons, distributing PV panels is uncomplicated and a lot less bulky. On the other hand consolidation in the industry and eventual economies in scale of production could point to less diversification at the lowest levels of supply compared to a system where individual wildcatters, new tech like fracking, and even cartel members (and outlaws/terrorists) undermining their quotas have a not insignificant effect on the cycles of energy pricing and supply.

Even technology with a well-defined trend toward decreasing prices like RAM or hard drives have this complication if you need to make your purchases right after floods in Thailand, or at the wrong time when a standards for RAM are coming into effect or stopping production.

With a small number of huge suppliers, and decades long replacement cycles leading to boom and bust cycles for the industry, it could be as difficult for users to plan energy supply needs as it has been when it comes from mismanaged areas of the world.

ams6110• 10 years ago

Interestingly if the price is falling that's motivation to not buy. Why install solar today when it will be cheaper tomorrow?

marcosdumay3• 10 years ago

While I do agree that it is a bad time to invest in electricity generation business in general, an electricity consumer would invest in solar today because he has some saved money today, and it's the best ROI around. (Or wouldn't, if it isn't.) The price it may have tomorrow does not change the overall picture.

lobe• 10 years ago

Couldn't the consumer deduce that the better ROI is to keep the money as cash (or some other liquid investment) for 2-3 years and then spend it on solar in 2 years time? My expectation of future prices definitely affects how I spend my money today.

jp555• 10 years ago

Maybe it's that a dollar today is still worth more than a dollar tomorrow.

toomuchtodo3• 10 years ago

Incentives phase out over the next few years.

spectrum1234• 10 years ago

With that logic no solar power plants that exist now would ever have been built.

jdeibele2• 10 years ago

I live in Portland. Lots of small, one-story houses being torn down and replaced with something that has 2 more floors.

What surprises me is that roofing on these new homes isn't required to have a south-facing exposure. Seems like that would make it a lot easier for homes to add solar.

toomuchtodo3• 10 years ago

Lobby your local representatives to update their code to require it. The increase in monthly mortgage payments to roll the system in at construction time is less than a utility bill would be (typically).

driverdan• 10 years ago

Maybe they don't want solar or don't want their roof facing that direction. Let people do what they want with their belongings. If south facing roofs have higher demand it will be reflected in the value of the home.

grecy2• 10 years ago

Maybe they don't want solar

They will when the cost of traditional electricity is priced to better reflect it's environmental impact.

In fact, I personally think nobody should be permitted to not have solar in a new building in 2016. You can't remove the seatbelts from your car in 2016. You can't build a new building with asbestos in 2016 and you can't turn your semi-auto rifle into a fully-auto (in most states). Just because you own it, doesn't mean you can do anything you want, that argument makes no sense.

Tharkun5• 10 years ago

If all roofs had south facing PV panels, there would be huge peaks at noon. This is already a problem in some German towns, where the installation of new south facing panels is no longer allowed.

mrfusion• 10 years ago

Isn't it too cloudy for solar there?

exabrial• 10 years ago

Article only shows "total installed cost". For an individual, that's great. But i would have liked to see the actual numbers that go into that itemized. If the "costs went down" because tax rebates went up, then we're no closer to solving any real problems.

i-blis• 10 years ago

Unfortunately, PV market price drops do not reach the EU market, due to the anti-dumping and anti-subsidy duties on crystalline silicon modules and cells originating from China in place since 2013. These protective measures have caused the solar module prices to even rise during the last two years (and certainly hampered solar deployment in Europe).

hacksonx• 10 years ago

An interesting finding this. The national power provider in South Africa (Eskom) has decided to go against the tide and focus on coal powered power stations. They have concluded that they won't be buying power from independent power providers which for the most part generate renewable energy. Maybe such researches and a more firm stance from institutions such as the IMF will help us in this regard.

erikb• 10 years ago

Huge fan of solar here. But I don't think the argumentation in this article is very convincing. 5-15% in a year? That's maybe a huge price drop for the industry, but for the average user it's barely worth mentioning. Maybe I'm just impatient. I want to see that stuff everywhere. Solar roads, solar train walls, solar sun umbrellas, maybe solar sun cream to charge your phone with your fingers, who knows.

And honestly I can't even say why. Water, biogas, wind. We already have quite a range of responsible energy sources. But none of them are as exciting as solar power to me. Nearly like a Mars colony. Not much logical reasoning behind it, but still quite exciting.

beachstartup• 10 years ago

but for the average user it's barely worth mentioning.

a reduction of 5-15% in a year is huge. are you familiar with how compounding works? that means the price will fall by almost half in about 5 years, and will be a tiny fraction of what it costs today, in a decade. what's expensive today will be economically viable or even cheap in just 2 or 3 years.

look at the graph! it's right there with easy to read colors and shapes.

sandworm1013• 10 years ago

> Water, ...

Look into the new science on that one. It can make carbon sense when you flood a desert to feed a hydro dam, but if you flood a forest then the carbon math isn't so great. Microhydro seems an answer, but there too you have to calculate how much forest is being deprived of water, and what that means for carbon uptake. It's probably still better than coal, but it isn't perfect.

schiffern• 10 years ago

Generally with small-scale microhydro (low single digit acres) you get good biomass production because you've created more edge. Edges between biomes (estuaries, forest-field transitions, etc) are the most productive and diverse places in nature because you get overlapping species and the associated beneficial interactions.

Many small dams produce a lot of forest-water edge cumulatively, unlike a few huge dams.

JumpCrisscross• 10 years ago

Levelised cost of energy (LCOE) is a good metric for comparing energy sources on cost [1].

According to the table on page 6 of this EIA report for weighted average LCOEs in America before tax credits for 2022 [2], photovoltaics are projected to be around $74 per MWh. That compares favourably with $100 for nuclear, but unfavourably with $56 for natural gas, $59 for wind or $64 for hydroelectric. (Solar gets a weighted average federal subsidy of $16/MWh subsidy; wind $8.)

[1] https://en.m.wikipedia.org/wiki/Cost_of_electricity_by_sourc...

[2] https://www.eia.gov/forecasts/aeo/pdf/electricity_generation...

Animats• 10 years ago

Note that the article is about big solar, not home solar. Big sites with lots of sun and no clouds are very cost-effective. Mojave is filling up with solar panels. Random house roofs, not so much.

The head of Applied Materials solar operations had a useful way of looking at costs. He'd draw a latitude line on a map, saying that below this line (Northern hemisphere) solar could beat out other sources of power without subsidies. About ten years ago, that line ran through Spain and Southern California. As the costs decline, it moves north. This is more useful than looking at costs over all locations. Solar is a location-specific thing. SF's BART system once looked into solar panels at stations, and decided that only one station in the whole system (Contra Costa) got enough sun to justify it.

Tesla is making noises about "solar shingles" for residential installations. The idea is to replace the roof, rather than sit on top of it. Others make those now; CertainTeed Products, for one. Dow Chemical just exited that business. Solar shingles work, but high installation cost and lower efficiency make it unproductive.

erikpukinskis2• 10 years ago

I don't really see what the relevance of a foggy coastal city is to the general solar market.

ee8aq3g5c6• 10 years ago

Most of BART's above-ground stations are not located in a foggy city.

jasode2• 10 years ago

Note that the article is about big solar, not home solar.

The article mentions "residential systems" twice as points of comparison. It also references the 5% reduced costs in home installs in the subtitle of the article.

nathan_long• 10 years ago

Makes me wonder about the deflationary effects. Eg, would it be rational to think "I could buy a solar system now, but if I wait a year it will be cheaper by a large enough margin it's better to pay more in electricity until then"?

The Price of Solar Is Declining to Unprecedented Lows

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