As a former masters student who studied power systems for nearly five years, solar is currently one of those hot buzz topics in academic literature, university projects, and optimistic energy media sources. There has been widespread optimism concerning solar PV growth and cost reduction for many years. In many states, it already makes perfect financial sense to throw up solar. In ALL of the others, it will in no more than a decade. We are currently on the cusp of what could be the biggest paradigm shift in energy since the advent of the water wheel. And most people have no clue what is coming.
When it comes to technological shifts these days, it almost always hinges on some financial aspect. Billions of dollars have been invested in the power grid we are connected to today. Billions of hours of labor, design, and maintenance. Despite all of this, residential customers might be poised to leave the grid all together in just a few years. Let me explain.
In 2006, the federal government implemented the Solar Investment Tax Credit (ITC). Between the time of its adoption and the end of 2014, the price of installed solar dropped a whopping 73%. As prices drop, it becomes more and more economically viable to install solar, which actually helps the price drop further. Installation in the United States is expensive because many companies/installers are inexperienced and lack the efficiency that German installers do. This may seem like an odd comparison, but to anyone who follows the solar PV market knows, Germany is the worldwide leader in installed solar PV. Their residential install cost in early 2013 was a mere $3/Watt while the US’s at the time was $6.19/Watt. A shocking difference, mostly due directly to installation and permitting expenses. Solar PV growth in the United States due to reduction in cost will in turn further reduce the cost.
Throwing around all of these numbers is great, but what do they mean? What $/Watt should make me install solar tomorrow? Well, it of course depends on your geographic location, current utility rates, and the specifications of your roof. The National Renewable Energy Laboratory did a fantastic report on breakeven costs per state under a variety of scenarios and essentially found that Southwest regions of the United States could see breakeven scenarios as low as $5/W, while the Midwest and other regions might not see breakeven scenarios even with $3.5/Watt. However, in the vast majority regions, $2/W would practically guarantee that solar PV installs would not only breakeven, but save you a lot of money.
So where are we now? As of March 13th, 2015, it was reported that the average residential install in the United States in $3.48/Watt, down from $3.83 at the start of 2014. And the future is looking good for anyone who has considered solar PV in the past. As manufacturing costs continue to fall abroad, and more people go solar in the states, it is estimated that solar PV system price will fall another 40% over the next couple of years. This spells massive change. A change that most people have yet to recognize, and probably don’t believe. More on solar later, but I encourage you all to do some research on the subject, as it stands to be a majorly disruptive technology in the coming years. Disruptive in a great way!