One of the most cost-effective ways to generate electricity, solar panels are mistakenly believed to be pricey and not paying off. Although increasingly more people all over the globe are switching to solar energy, price concerns are still in the air. Today, we will address the change in solar panel prices and costs over time so you can understand whether it’s time to go solar.
The Advent of Technology
In 1839, Alexandre-Edmond Becquerel discovered the photovoltaic effect, the ability of silver chloride to generate current and voltage under the influence of solar energy. In 1888, Alexander Stoletov took this effect as a basis for the first solar cell, giving birth to solar energy at the turn of the century. It took several more years and Einstein’s paper for the US scientific community to show interest in the technology, marketing the beginning of the growth of solar energy worldwide. Over the past decades, it has been fully adapted for industrial and domestic use, with solar getting cheaper and more efficient.
Solar Panels Prices in the Past
To understand the dynamics of solar panel prices over time, we should analyze the price performance in the last few decades. In 1977, a 1-watt photocell cost $77; today, it costs around 20 cents or 600 times cheaper. According to Swanson’s law, solar energy costs decrease by 20% for every doubling of the shipped volume. In other words, solar panels are getting cheaper. Much cheaper.
Likewise, solar panels are getting better, with higher efficiency, productivity, reliability, and faster deployment. The constant decrease in solar panel prices over time corresponds to an increase in demand. Since 2000, there has been a sharp rise in the popularity of distributed solar energy, with more and more people using smaller solar systems for private needs. Solar systems are like smartphones. Twenty years ago, smartphones were super-expensive and allowed only SMS and calls. Today, they can do wonders at a fraction of the original price. If solar energy technology advances as rapidly as smartphones, everyone will soon be able to afford a rooftop panel, not paying too much attention to how expensive the solar panel is.
Raw Materials Problems
The two flies in the ointment are the shortage of raw materials – polysilicon, solar glass, copper, and silver – dictated by the increase in demand for solar panels, the ongoing pandemic, and the war in Ukraine. These factors explain the differences in the cost of solar panels in different countries and a short-time rise in the price of the latter.
New Law = New Opportunities
Joe Biden has increased the federal solar tax credit to 30% (previously 26%) through 2034 and allowed the application of the Defense Production Act to technology. These measures must ensure the stability of the solar energy market, giving manufacturers the ability to devote more resources to improving the technology and thereby reducing the cost of solar panels.
Soft Expenses and the Cost Of Solar
Surprisingly, solar panel prices are primarily determined by non-hardware (soft) expenses: marketing, delivery, installation, and maintenance of a solar panel. The smaller the system, the higher the soft expenses, and the more expensive it is for the consumer. For example, installing a 3 kW solar system will incur the same soft costs as a 25 kW facility, making the latter much cheaper.
Soft Costs and Solar Panel Equipment Price
The cost of installing a solar battery has increased slightly over the past few years, but the batteries themselves have become cheaper and more efficient, enabling better installations for the same money. The decrease in the average cost of solar panels is resulting from cheaper modules and solar panel details, even despite an increase in the price of raw materials and services.
- Will Solar Panels Price Continue to Fall?
The price of solar panels will likely continue to fall, but not as much as before. The solar system cost is already quite low, with soft costs and the price of raw materials increasing slightly. That said, even if solar panel costs rise over time, they won’t render them useless or less popular.
- Should You Install Solar Panels Now?
Even if solar panel costs seem high, installing solar panels for private use is a great idea. Properly chosen and installed solar panels will likely pay off in several years to become one of the greatest investments in your life.
Likewise, more and more large-scale enterprises are expected to switch to solar as the technology becomes cheaper and more efficient. Some day, all power plants might use photovoltaic energy.
The sooner you go solar, the sooner your investment will pay off. And while waiting for the price to drop is also a possible strategy, solar energy is already cheap enough to get in without too much risk.