Solar Panel Module Prices Continue to Fall

A recent article by the Associated Press got me re-thinking about the ROI (Return On Investment) of solar power. Solar power is at a turning point and becoming main stream. Here is an interesting quote from the article. “Solar power installations doubled in the United States last year and are expected to double again this year. More solar energy is being planned than any other power source, including nuclear, coal, natural gas and wind.”

So what is the current ROI for solar in Michigan, one of the cloudiest places in the nation. Solarbuzz ran an article a couple of weeks ago about global solar panel prices, and shows that today there are many panels for under $3.00/watt and you can buy some panels for as low as $2.50/watt.

Solar Panel Prices

Solarbuzz Retail Module Price Index

Michigan gets about 4 hours of peak sun per day. A theoretical 1-watt panel would generate 4 watt-hours per day, or 0.004 KWH per day. If I could sell or offset buying traditional power at $0.12 per KWH, that 1-watt panels would make (0.004*0.12) $0.0005 per day. A solar panel that cost $3.00/watt would take (3.00/0.0005/365) ~17 years to break even. For $2.50/watt the payback period is ~14 years.

These numbers get even better if you add inflation to the cost of traditional power for the 30 year life time of the typical solar installation. You can also add in the current 30% federal tax credit which is still in effect. This gets the payback period to about 10 years or better. While still longer then most people want, it is a positive ROI and if it pays for itself in 10 years, that’s 20 years of free power. Sounds like a good deal to me.

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7 Responses to “Solar Panel Module Prices Continue to Fall”

  1. Ed Wahl says:

    The price has been SLOWLY falling for years. But even at cheap rates, with a decent setup and a nice inverter, how do we in the northern midwest beat our cruddy insolation rates?

  2. You are basing you reasoning around statistics. The reason it is not popular at the moment is because of the cost and land area it uses. It is a very viable alternative if costs can be brought down. Using wind power (although expensive) does not need great areas of land to be effective. Agriculture can still take place around these “windmills”. Ocean power is expensive to install and difficult to maintain. Geothermal power is nearly infinitely renewable but also at the moment difficult to install and maintain for generating electricity.

  3. Mark Naess says:

    So would this be a good time to buy solar for my house? Ideally I’d like to have an electric, solar powered car. Interesting article suggests these conditions may not last? http://www.washingtonpost.com/blogs/ezra-klein/post/how-far-can-solar-go-a-less-optimistic-take/2011/11/11/gIQAFRplFN_blog.html

    I also wonder about the property tax implications of adding solar–that is never factored in to cost projections. There was a bill in Lansing to exempt the solar installation from local property tax–did that ever happen?

    Thanks.

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  5. MikelDey says:

    Even with the fall in the prices of solar panels, the overall per unit cost of solar power is still haigher compared to the utility company. May be in the long run i will see some benifit. Probably the best time would be when my utility company can not give any more power. I dont think i will see that day ever.

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