Solar Energy Cost Has Dropped 90%, “Alternative” Now “Mainstream”

By: | July 8th, 2013

The Cost of Solar Energy Plummeting

Conventional sources of generating electricity, including coal and oil, have historically been much cheaper than renewables. But that may be changing.

Comparing Costs of Different Forms Of Energy

To measure energy costs and compare them the concept of kilowatt-hours (KWH) is used. A ton of coal produces about 6,000 KWH of electricity for about $40 per short ton (2,000 lbs.) A barrel of oil produces 1,700 KWH at a cost of about five cents per KWH when the price of oil is about $75 per barrel.

When looking at the cost of solar energy. It is common to consider the lifetime of the installation and the number of hours of available sunlight, which changes with location. If the average peak sunlight hours per day is 4.0, the average annual output of the solar energy panels can be calculated.

The direct current (DC) solar power is converted to alternating current (AC) so that it can be used in residences and businesses. This conversion leads to an energy loss of about 10%.

Total electric output is the product of the average peak hours of sunlight (4.0 hours per day), the number of days in the year, and the lifetime of the system. In this case 20 years. In addition to the total electric output, utilities offer rebates and governments offer tax incentives that should be calculated and taken into account when assessing a project’s overall costs.

Many companies, for example, Sharp Solar, provide cost calculators on their websites to help building owners make these calculations by providing geographical location information with respect to sunlight, rebates and tax incentives.

Prices for Solar Coming Down Fast

Due to the widespread production of solar panels manufacturers are competing on price. Solar panel prices are now 40% less than they were just two years ago. In New Jersey, for example, conventional electricity currently costs about $.17 per kilowatt hour (KWH). Residential solar power systems are currently less expensive, even without any incentives.

David Russell Schilling

David enjoys research and writing about cutting edge technologies that hold the promise of improving conditions for all life on planet earth.

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One thought on “Solar Energy Cost Has Dropped 90%, “Alternative” Now “Mainstream”

  1. David Knowles
    July 9, 2013 at 7:08 pm

    I’m not sure of the objective of this article. It seems that the author is trying to assert that solar PV can compete on price with existing coal, gas, or nuclear power, but the numbers presented do not support this. Completely missing is system maintenance charges. Today, an investment in a residential system without subsidies will take close to 30 years to return the original investment. Not a good deal. Plus, you still have to buy power off of the grid, or invest a huge amount in battery storage.
    Keep working – PV still has a LONG way to go.

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