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The Price of Solar Power Keeps Falling

It's getting a lot cheaper to install solar power, and a lot easier to imagine a solar-powered future.
September 2, 2016, 10am PDT | James Brasuell | @CasualBrasuell
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Mike Flippo

"The installed price of solar energy has declined significantly in recent years as policy and market forces have driven more and more solar installations," reports Robert Fares.

Now, the latest data show that the continued decrease in solar prices is unlikely to slow down anytime soon, with total installed prices dropping by 5 percent for rooftop residential systems, and 12 percent for larger utility-scale solar farms. With solar already achieving record-low prices, the cost decline observed in 2015 indicates that the coming years will likely see utility-scale solar become cost competitive with conventional forms of electricity generation.  

Flores cites data from two Lawrence Berkeley National Laboratory reports (Tracking the Sun IX and Utility-Scale Solar 2015), which show the cost of solar, in all its forms, declining significantly since 2010. Interestingly, the price of solar panels has remained relatively flat since 2012, but "installed cost" includes everything from electronics to hardware to the installation process. One component contributing significantly to the installed cost of solar units: inverters that convert DC power fro the panels to AC power for the grid.

Flores also identifies a specific finding from the reports as the "most interesting." The reports find falling prices for power purchase agreements (PPAs). The price of a solar PP fell to $50 per megawatt-hour in 2015. As Flores notes, that price is quickly approaching the $30 to $40 per megawatt-hour threshold set by the average market price of electricity.

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Published on Tuesday, September 27, 2016 in Scientific American
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