Will Solar Prices Continue to Decline?

Posted on: February 12, 2014

If you’ve been following the solar industry for the last few years, you’ve likely heard about how much solar panel prices have declined and the number of installations have skyrocketed. Just how much? Stephen Lacey from Greentech Media provides the numbers:

“It took nearly four decades to install 50 gigawatts of PV capacity worldwide. But in the last 2 ½ years, the industry jumped from 50 gigawatts of PV capacity to just over 100 gigawatts. At the same time, global module prices have fallen 62 percent since January 2011. Even more amazingly, the solar industry is on track to install another 100 gigawatts worldwide by 2015 — nearly doubling solar capacity in the next 2 1/2 years.”

So can prices continue to decline and if so, what does that mean for the solar industry in our area, including homeowners looking for solar energy in the San Diego, CA?

Why Have Solar Prices Declined So Dramatically?

Solar prices have declined for a number of reasons—most notably—economies of scale. Although the solar industry itself is not a new one, for decades it was a small niche industry. It wasn’t until many of the world’s largest, and wealthiest, countries began offering attractive incentives that demand for solar panels increased to the point where demand reached billions of dollars per year.

As demand grew, well-optimized supply chains and massive factories developed to accommodate that demand. Processes, logistics, manufacturing, and shipping were all optimized to drive costs down, accounting for the majority of the price decline.

Those declines were amplified with improved technology—allowing solar panels to become more efficient while also using less material in the manufacturing process.

Are Solar Cost Decreases Sustainable?

Solar costs are expected to continue their decline, for at least the next few years, but the pace of the price decrease is expected to slow. The bulk of future solar price reductions in the U.S. in the coming years will come in the form of expedited permitting, marketing, and installation.

In many areas of the country, solar permitting follows antiquated laws that slow down the process and increase costs.

Additionally, some of the gains for the end consumer will be lost as incentive programs, but the price gains made on the materials, permitting, and installation sides should keep solar as an attractive investment for home and business owners alike.

Want to Learn More About Solar in San Diego?

If you are considering installing solar and want to learn more about solar installation in San Diego and the surrounding area for your home or business, give us a call or fill out a contact form on the right. Our solar technicians can discuss the options that are available to you, assess your home’s solar potential, and even provide you with production and return on investment estimates!

Contact us today to get started!