Solar Costs Are Dropping. Is It in Your Future?
Nov. 29, 2011
With all the bad press from the federal bailout of Solyndra, one fact was forgotten. Sales of Solyndra’s alternative design dropped, leading to its bankruptcy, because of a glut of polysilicon, the semiconductor used in the most common type of solar panel. In fact, polysilicon’s price plunged by 93% since 2009. Standard designs are now less costly.
So what does this mean for the solar industry and does that make getting electricity from solar a more viable alternative for a facility? According to Bloomberg, because the cost has dropped so greatly, the top five producers of polysilicon have doubled output and will likely produce more polysilicon than needed to meet global demand for solar panels in the foreseeable future. While this may lead to a shakeout in the industry and some shutdowns, all prognostications are for a settling of the market price around or slightly higher than its current value, leading to a period of cost stability for polysilicon.
Given the dropping and likely stable prices for solar panels, is this the time for a facility to “go solar”? Some recent published articles indicate some key concerns remain. First, price. While polysilicon prices have dropped markedly, it represents only 25% of the total cost of solar PV. Last summer, the price for solar was about $0.20/kwh, not competitive with fossil fuel-based electricity from a utility. A drop of 25% may still not make it competitive. In addition, the upfront cost to install solar panels on a roof or in a parking lot is still relatively high compared to wind turbines and, of course, compared to little cost for existing utility electricity lines. So while prices for a system will drop, it is unlikely to be a sure fire alternative to traditional electricity sources cost-wise.
Another concern is government subsidies. A decline in the price for solar PV may signal the government to no longer subsidize potential solar purchasers. Such purchasers may be concerned about long-term planning of changes in such subsidies.
A final thought concerns the public. Besides having “free” electricity from the sun (and possibly selling excess electricity generated back to the grid), how will a company’s stakeholders and the public view this? While the customer base (both retailers and the public) would be pleased to see publicity photos of new solar PV cells providing clean energy, companies know that the bottom line is holding the line on prices. Since a company by nature must pass on all costs on to the products it sells, companies are concerned that solar PV may still put them in a non-competitive position compared to relatively cheaper electricity from the established grid. Executives are still concerned about the issues that have been holding up solar PV growth in the first place.
CCES experts can help your firm evaluate whether alternative energy is right for you.
Posted: November 29th, 2011 under Uncategorized.
Tags: alternative energy, clean energy, solar PV
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