Not long ago, solar energy was considered to be too expensive to be a serious energy contender. No longer. Solar energy is now a cost competitive source of energy in states with higher electricity rates and higher solar energy potential and is expected to be cost competitive soon in many other states. Economist Paul Krugman writes that we are on the cusp of an energy transformation, driven by the rapidly falling cost of solar power, that is solar PV, the photo voltaic panels placed on rooftops. Photo voltaic panels convert the sun's rays directly to electricity.The Open Neighborhoods organization in Los Angeles recently arranged a group purchase of photo voltaic solar panels that will bring the cost of solar energy close to the cost of grid power. John Farrell, who maintains the Energy Self Reliant States blog notes the enormous savings of the group purchase, $2.00 off the usual price per kilowatt hour of $4.40. His chart illustrates the slightly greater cost of solar over grid at the beginning of the 25 year life expectancy of the solar panels that then results in great savings over the life of the panels.
Watch a brief news report on how California schools are saving big on their energy costs by placing solar PV canopies over their parking lots.
John Farrell points out that 60 million Americans live in areas where solar energy costs are competitive with retail energy prices. For example, New York City could supply 14 percent of its total electricity from rooftop solar alone, transform over 50,000 homes and businesses into energy producers, and create over 40,000 jobs. Because the city has good sun and high electricity prices, switching to solar would save New Yorkers millions of dollars on their electric bills.
In Washington, DC, electricity production from rooftop solar could supply 20 percent of the city's electricity, save $250 million in electricity costs. boost the local economy by up to $1.5 billion, and create over 14,000 jobs.
The following chart shows the sharp drop in cost for installed solar photo voltaic panels in Germany over the past 5 years. The 2011 price for solar PV panels is about half of what it was in 2006 and is expected to drop further.
What is driving the cost of solar PV energy down? Contributing to lower costs is increased installation which has led to economies of scale in Australia, China, Germany, and in Los Angeles, Boulder, and New York. Research by the National Renewable Energy Laboratory and private corporations has led to a decrease in the cost of producing solar panels as well as increases in the amount of electricity produced by a panel as are shown in the examples which follow. In addition, subsidies of the solar industry by the Chinese government, as well as currency exchange rates have contributed to low prices for solar panels from China. The fall in the price of solar panels has led to a rapid growth in solar installations. David Crane, CEO of NRG, owner of nuclear and coal energy, states that the installed cost of solar panels at $2.50 per watt translates into an electricity cost of 12.5 cents per hour, cheaper than the grid in 20 states, and the cost comparison doesn't count CO2 emissions' environmental effects and coal emissions' harm to people's health.