Experts: Solar Installations Expected to Surge as Cost of Solar Declines

Solar industry executives expect the number of solar installations across the U.S. to surge over the next two years as the cost of solar comes down.

Bloomberg New Energy Finance recently estimated that photovoltaic projects will cost $1.45 a watt to build by 2020, half the current price. Electricity from coal costs about 7 cents a kilowatt hour compared with 6 cents for natural gas and 22.3 cents for solar photovoltaic energy in the final quarter of last year, according to New Energy Finance estimates. The London-based research company says solar is viable against fossil fuels on the electric grid in the most sunny regions such as the Middle East.

According to some solar experts, comparisons often overstate the costs of solar because they may take into account the prices paid by consumers and small businesses who install roof-top power systems, instead of the rates utilities charge each other.

According to New Energy Finance, Chinese companies such as JA Solar Holdings Ltd., Canadian Solar and Yingli Green Energy Holding Co. are making panels cheaper, fueled by better cell technology and more streamlined manufacturing processes which is making solar more economical as compared to coal based energy-generation.

According to Michael Liebreich, chief executive officer of New Energy Finance, “The most powerful driver in our industry is the relentless reduction of cost…[i]n a decade the cost of solar projects is going to halve again.”

New Energy Finance estimates that solar installation costs will almost double to 32.6 gigawatts by 2013 from 18.6 gigawatts last year. This is supported by the fact that manufacturing capacity worldwide has almost quadrupled since 2008 to 27.5 gigawatts, and 12 gigawatts of production will be added this year.