EVER MORE AFFORDABLE SUN

A Competitive Boost For Solar Energy; With expanded production bringing down panel prices, a green energy outfitter claims price parity with grid power is near.
Christopher Helman, November 25, 2009 (Forbes)

"The dream of every green energy acolyte is that there will come a time when it is no stranger for homes to have solar panels than to have air conditioning units…John Berger, chief executive of Standard Renewable Energy, thinks that in the next decade the U.S. could get well down the road to making that a reality

"Houston-based Standard Renewable got 75% of its $35 million in revenue this year from installing solar systems. Just 10 months ago it was buying solar panels from the likes of Kyocera, BP, SunPower and First Solar for $4 per watt. Today, prices have plunged to $1.90 a watt."

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"It's not for lack of demand. What's brought prices down is a surge in worldwide manufacturing capacity. New plants have opened across China. Factories are even coming to the U.S…[S]olar power is starting to look affordable and even competitive with grid power…Berger says Standard has installed residential solar systems for as little as $4 per watt. [Berger has expanded Standard…Revenues have tripled in the past year and profitability is in sight…He's hired 130 new employees since July…bringing his total staff to 330…[and] Berger says now's the time to buy solar, as many state and local rebates will run out over the next year or so…]

"…[F]or 31 metropolitan areas, factoring in average sunshine and cloud cover, applying the federal government's 30% investment tax credit…assuming that a homeowner can finance a system at the going mortgage rate of around 5%…[and amortized] over 20 years, the effective rate that a homeowner would pay for [solar] electricity in the New York metro area is 12.7 cents per kilowatt/hour. In Dallas it's 11 cents/kwh, and in Las Vegas, just 9.3 cents…The nationwide average residential electricity price is 12.05 cents…"

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"Add in generous subsidies on municipal and state levels…and the cost goes even lower…And…All this new panel production online is squeezing margins of big players like First Solar, whose shares have fallen 40% since May. Berger thinks that panel makers' profit margins, now around 15%, will fade closer to 7% in the years to come--in line with the makers of other kinds of silicon-based chips…[S]olar would also be helped by any carbon emissions legislation that might pass Congress…Carbon cap-and-trade would inevitably add costs to power generated from coal and natural gas…

"…[Solar] is a distributed source of power generation…No need to build new transmission lines…[But the] average home system that Standard Renewable installs is a 3.5 kw system that will produce, on average, 4,900 kwh of electricity a year, or less than a third of the average home's electricity usage. It'll cost roughly $14,000 installed…If your utility charges, say, 13 cents per kwh, the system will pay for itself in 22 years."