The Reducing Cost of Solar Panel Installation
Homeowners are constantly looking for home improvement options. It could be renovation, landscaping, or even a switch to greener energy. The energy saving concept is not new as we already have many options. Solar power is ahead of the pack because of the transformations witnessed in recent times.
There was a time that solar power was only economically viable in spaceships. It is interesting how fast we have risen from those shackles to now when the chances of this renewable source replacing natural gas and coal are so real. Bloomberg New Energy Finance estimates that solar power will be the cheapest source of power within three decades.
The annual growth of solar power in the United States is astonishing. The third quarter of 2017 saw at least 2 Giga-watts (GW) of solar photovoltaic (PV) installed. It is now extremely easy to secure affordable bids for home solar installation in many states. What is happening in the market? Let us review some of the reasons cost of solar panels per square foot and other aspects are so exciting today.
1. Improved Technology
The energy production of any system is directly proportional to the efficiency of its components. In recent years, components, especially solar panels, have become more energy efficient. The best solar panel efficiency achieved so far is 22.5% for available ones. Although most solar panels have efficiencies between 14% and 16%, this is a massive improvement from a few decades ago.
2. Economies of Scale -Lower Manufacturing Costs
With the growing popularity of solar PV for homes, installations have increased leading to economies of scale. Economies of scale have influenced both installation and hardware costs. Hardware associated with solar panel installation includes balance of system, racking, inverters and modules. We can conclude that a reduction in hardware costs has been the major driver of the increased affordability of the cost of solar panels per square foot. This is according to the US photovoltaic prices and cost breakdown of 2015.
3. Government Support- Market Growth and Research
Despite the US government vowing to revive the coal industry a few months ago, Chinese and Indian markets continue to enjoy government support. In China for example, there was no government support for the industry until 1995. It was after the introduction of the Township Electrification Program and the Brightness Program that real growth was experienced.
Germany has also seen successful implementation of government funded solar programs. “Renewable Portfolio Standards” and “feed-in-tariffs” have helped spur the growth of this industry in other countries too including Spain, Italy and even the United States.
Talking of the United States, the efforts by the U.S. Department of Energy (DOE) are noticeable. They are working with the industry, laboratories and universities through partnerships and funding towards several innovative solutions such as these:
- PV Supply Chain and Cross-Cutting Technologies
- Solar Foundational Program to Advance Cell Efficiency Projects
- SunShot Incubator Projects
Most of the advancements in solar technology took place in the last 15 years. The interesting thing is that because of the changes happening in the sector, particularly the increasingly cold shoulder from the government, it has become difficult to predict the cost of solar panels per square foot in future.
Based on convention, the prices are expected to continue falling. The question is how fast and how far. For the last one decade, industry experts have been struggling to give a clear answer to this.
What everyone seems to be agreeing is that the future cost of solar panels is dependent on the following factors:
- Market supply and demand
- Raw material costs
- Feed in Tariff
- Economic policies
The solar price plunge seems unstoppable unless some major trade dispute occurs. Every component of the system is costing less with time and this is happening globally, not just in the United States. You can learn more about solar power and some of its innovative products on this page.
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