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Cost of solar panels drops--but tax breaks dip too

The average cost of solar photovoltaic power systems in the U.S. plunged more than 30% from 1998 to 2008, with a 4% drop between 2007 and 2008, according to a new report from the Lawrence Berkeley National Laboratory.

But a simultaneous drop in total after-tax incentives for photovoltaics from 2007 to 2008 resulted in a slight rise in net installed cost, according to the lab, which is run by the Department of Energy.

Overall net costs for residential solar systems were up 1% in 2008 compared with the previous year, averaging $5.40 per watt. Costs for commercial photovoltaics averaged $4.20 per watt, a 5% increase from 2007.

After-tax incentives for residential systems were at a historic low of $2.90 per watt in 2008, while incentives for commercial photovoltaics were at $4 per watt, down slightly from the 2006 peak.

But excluding the incentives, installation costs dropped recently after a multi-year plateau due to the solar industry’s expanded manufacturing capacity and the pressures of the financial crisis.

The early end of the decline, from 1998 through 2007, was caused by shrinking costs of labor, marketing, overhead, etc.

The Berkeley Lab study considered 52,000 photovoltaic systems in 16 states. The average cost of installation dropped from $10.80 per watt in 1998 to $7.50 per watt in 2008, or a reduction of 3.6% per year.

Small residential solar systems completed in 2008, producing less than 2 kilowatts, cost an average of $9.20 per watt, while large commercial photovoltaics producing between 500 to 700 kilowatts averaged $6.50 per watt.

The cost of going solar varies widely across states. For systems producing less than 10 kilowatts that were completed in 2008, costs range from a low of $7.30 per watt in Arizona, to a high of $9.90 per watt in Pennsylvania and Ohio. California’s average is $8.20 per watt.

But the report suggests that costs could be driven even lower through large-scale implementation.

-- Tiffany Hsu
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With an advance in solar technology, production costs will continue to fall. With an increase in demand and larger production capacities prices will come down further. Until the system has reached enough momentum of its own governmental support in the form of financial incentives is needed. The model used in Germany to give homeowners the right to feed excess electricity they generated themselves back into the grid (against payment by the power companies) has worked very well and might be worth considering in the US, too.

That's wierd. I read a book, Unstoppable Global Warming, and it stated that a European chip maker found a new way to produce solar cells that would produce a single watt for $0.20 as for fossil fuels it would cost $0.40.
The book was published in late 2007.

Your posted was well informative, that every person who read or see this will get knowledge about you posted. you made a great job for this and thank you for sharing your taughts on us..More power!

Considering the fact that solar is almost zero maintenance, using energy that already falls on the Earth already, does not involve any feedstock (oil, natural gas, coal - not any fuel), does not produce any output products to handle (burnt gases, or other materials), has long projected life (most equipment is guaranteed for 25 yeas), over all will have lesser cost than continuing to use coal, oil or even nuclear. It seem expensive now because it has not gone through the support and development cycle most other power generation type has - coal, oil, nuclear etc. Also as points out the money that needs to be put to offset large (substantial) amounts of the electricity now made through poisonous burning of coal can be replaces with money that are being thrown for economic development anyway. Building solar will bring economic development and stop/ reduce poisonous pollution. Plus why are we looking only at simple money figures to build solar. Why not look at the lives it is going to save. If we always have to look at doing things cheaply should we not close all hospitals - they are terribly expensive to run. Organized and government sponsored education is expensive - should we not leave kids educate themselves? We do not do things because they are cheap, we do things because they make sense. Would it not make sense to stop poisoning the planet for the generations and start making electricity cleanly.

Unlike healthcare, developing solar resources will strengthen the economy. Obama should take a note Bill Clinton- don't let healthcare be your Waterloo. Alternative energy is the new internet.

The fact is that installing solar panels for your home or business can cut your electric bill to $0 today. For example, if you spend $200 per month for electricity, then you will spend $81,979 over 25 years, including a low annual price inflation rate of 2.5%. No matter how you calculate it, you will save money with a $5,000 to $25,000 solar panel system compared to paying a traditional utility. Some "experts" will say the cost per kilo-watt (kW) for traditional utility energy is less than the cost per kW of solar. Remember, you can pay the utility for 25 years, with annual price increases, or you can pay a lot less with solar power.

To something about this today, then visit to search a nationwide network of 500 local solar panel installers. You can also find information about state solar rebates, federal tax credits, solar financing and leasing, system costs and the benefits of going solar. The bottom line is that solar panels have never been more affordable.

" Cost could be driven even lower by large-scale implementation, " if consumers could borrow like seniors do off their home equity with a reverse mortgage (see . Since the market dwarfs the government in shear finance volume , using a market based incentive would boost solar investment , installations and jobs.
The distance in the hierarchy of government top priorities, oil interests, military contractors, to a far distant role of solar and clean energy means that unleashing the power of the market on this issue is unlikely to happen, no matter how logical or crucial to reversing climate change or to the jobless problem.

Accroding to the solar panel price information from PVinsights,, solar panel price drop around 50% to $1.95 now from 4Q08. Germany government is also considering Feed-in Tariff cut in 2010.


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