If prospects for lower energy bills and a role in reducing the country's reliance on fossil fuels aren't convincing enough, a discounted price tag on solar panels may entice more consumers to give their roof—and their household budget—a makeover.
The past 12 months have featured one of the most dramatic price drops in the history of the solar market, according to industry figures. So far in 2011, the cost of solar photovoltaic, or PV, panels has come down by 30 percent from 2010 levels and could have more room to drop, according to the Solar Energy Industry Association (SEIA). Separate data produced by the Lawrence Berkeley National Laboratory show a 17 percent drop in prices between 2009 and 2010, and a drop on pace to reach 22 percent this year.
The looming, although staggered, expiration of some key tax incentives is also pushing homeowners to move sooner rather than later. Falling prices are coming just in time to help offset these lost tax breaks, according to industry participants. The industry is also getting behind more flexible financing means, including loan programs that help limit upfront costs. Leasing home solar systems is another option, and consumers are taking advantage of the trend.
"Innovative business models by solar companies—including leasing models—have helped to make solar a cost-saving option," says Rhone Resch, president and CEO of the SEIA. "It's not just in the Southwest states. Solar is an option for homeowners in all 50 states. New Jersey, for example, is the second-largest solar market in the country."
Not all areas offer the same incentives or financing options, however, and researching the pro-solar climate of consumers' respective home states is recommended. Visit the U.S. Department of Energy's database for state incentives for renewable and efficiency, known as DSIRE, at www.dsireusa.org.
This year, a 30 percent cash rebate through the U.S. Treasury Department comes to an end after a one-year extension from its previous deadline. And the 30 percent federal tax credit program will sunset at the end of 2016. The tax credit covers 30 percent of the cost with no upper limit. Existing homes and new construction qualify, including principal and second homes; rentals do not qualify. See energystar.gov for more details on tax credit qualifications.
Supply and demand shift. Still, changes in cost and availability look to continue with or without government help. The pricing shift has a lot to do with what had been a limited supply in a relatively young industry that's finally catching up with demand. In the first quarter of 2011, the United States installed 252 megawatts (MW) of grid-connected PV systems, for 66 percent year-over-year growth compared with first-quarter 2010 installations, according to the SEIA. The longer-term trend is also evident: Nationwide, the number of homes installing solar has gone from under 10,000 annually in 2006 to nearly 50,000 in 2010.
"Pricing supply and demand curves have swapped and solar, fundamentally, will now behave like other energy markets," says Jim Pape, president of the residential and commercial business group, at San Jose, Calif.-based SunPower. "Today, in the PV industry, it's what we might call oversupply but for customers, it's normal supply. Companies [that sell and install systems] will have to differentiate themselves with quality and service."
In fact, the pricing shift and industry glut in supply has claimed at least one victim. California-based international solar provider Solyndra, which focused on commercial and not residential installations, filed for bankruptcy on September 6, carrying $783 million of secured debt. Now, the company is at the center of some pre-election heat on the White House because of substantial federal support for the company.