Solar Power about to Go Mainstream

By Sam Newman
Yahoo News
April 6, 2009

How cutting costs throughout the solar industry will make panels affordable soon

Though solar power has been around for three decades now, it provides barely 0.1
percent of U.S. electricity.

Power from the sun remains considerably more expensive than fossil fuel
technologies or other renewables such as wind and geothermal, and high costs
have largely relegated solar panel installations to special applications like
off-grid homes.

As a result, few people are aware that large-scale deployment is a viable
solution to reducing carbon emissions.

Yet the solar industry is set to surprise a whole lot of people. Prices are
coming down quickly, and the industry is hoping to revolutionize our energy system.

Solar power growing fast

Solar power has achieved tremendous development recently. Growth rates have
averaged nearly 50 percent per year for over a decade. Yet for the technology to
contribute a large fraction of our electric supply, this growth must be
maintained for at least another 10 years to come.

If current trends continue, photovoltaic (PV) systems could contribute 10
percent of our electricity sometime in the early 2020s, a major gateway to
future advances.

Yet the challenge of maintaining 50 percent growth rates for another 10 years
cannot be overstated and will be particularly daunting with the current recession.

Ensuring solar prices continue to fall

Historically, solar power prices have dropped as the industry has grown. This
trend must continue, and recent analysis by RMI's Energy and Resources Team
confirms that today's technologies still have significant cost reduction

Economies of scale: As PV companies grow, they and their supply chains --
those who produce the silicon and glass for example -- will mature.
Manufacturers can then benefit from dropping prices of products including
steel wire, advanced chemicals, and electronics.

Energy and resource efficiency: Each new manufacturing facility can and will
be able to produce PV panels with less energy and materials.

Consider that consumables like lubricant, abrasive, chemicals, wire, and ink
account for a large part of the PV cost structure and are frequently wasted. At
the wafering step, for example, wafers are cleaned after they are cut and then
cleaned again before cell processing. This requires excess water and chemicals.
In the future, waste like this will be driven out by a combination of process
improvement, engineering breakthroughs, and adoption of best practices.

Standardized installations: Today, most rooftop installations are designed and
permitted individually, then built in place. As solar installations become
more widespread and competition increases, installers will reduce costs and
complexity by building standardized plug-and-play systems.

If opportunities like these are captured, solar power could be widely
competitive by 2015. See this recent report by Photon Consulting for details.
We can look forward to cost reductions accelerating demand for PV systems and
driving the industry to scale. As the industry grows, it will achieve additional
cost reductions, enabling more demand. This virtuous cycle will propel solar
power into the mainstream.

Can't wait for solar prices to drop?

In the meantime, as costs continue to come down, government subsidies and
stimulus money can make solar a great investment today.

The federal government offers a 30 percent tax credit on investments in solar
power installations. Utilities and state and local governments offer additional
incentives. For example, in Colorado, Xcel Energy provides rebates of $3.50 per
watt of system cost.

Programs like these can reduce the cost of a PV system by 75 percent. Savings in
utility bills can then quickly pay back the purchase price. Check out the DSIRE
Database for detailed information about financial incentives in your state.

Sam Newman is a consultant on RMI's Energy and Resources Team.


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