Solar Power Prices are Plummeting

The Eastside Sustainable Business Alliance hosted a program on February 28 entitled “The Business Case for Solar” which featured Linda Irvine of Northwest SEED and Stanley Florek of Tangerine Power.  The speakers emphasized the impact that solar can have in Washington State.

The cost of solar photovoltaic panels have dropped by seventeen percent in 2011, continuing a significant reduction in costs.  In 2007, according to Linda Irvine, solar costs averaged a total of $8.00 per watt installed.  By 2010, those costs had diminished to $6.30 with a further 17% drop in 2011.

Total solar capacity in Washington state is still a modest 12 megawatts, but grew by 50% in 2011.  This has been due to a number of factors including price.  Efforts to streamline regulations, subsidies, financing programs, and neighborhood campaigns have also had an impact.  There are now over 2,000 installations in the state.  Over 1,00o are affiliated with WCTA Member Puget Sound Energy.  The goal of the Department of Energy Sunshot Initiative is to double the installations.

Stanley Florek of Tangerine Power argued that solar makes sense from the standpoint of a hedge against the cost variations in other energy sources.  In addition, he argued that declining prices will continue to improved the ROI potential.  He made the case that long-term costs would continue to decline, although he predicted that there may be some short-term increases as the result of trade dispute issues.  He said that solar can achieve an 8% annual return on investment over ten years and that it has a 5-6 year simple payback.  The total cost of solar can drop by as much as fifty percent of the cost after year one with several incentive programs:

  • State production incentives can decrease the costs by $0.15-0.54 per kwh
  • Federal credits can drop costs by 30%
  • Accelerated depreciation on solar can reduce costs by another 20%
  • In Washington, the sales tax rebate can be taken at a full 100% of sales taxes on units that deliver less than 10 kw.  Over 10kw systems have a 75% reduction.  Mr. Florek indicated that these rebates are starting to phase out.

The optimal size of a solar array in western Washington, according to Mr. Florek, is 10-30 Kw which costs $50,000 to $200,000.

In response to a question, the speakers noted that maintenance costs of solar PV systems can be expected to be minimal.  They noted that many manufacturers offer a 25 year warranty.

You can find Linda Irvine’s presentation here.  You can find Stanley Florek’s presentation here.