Everyone we interact with in the public sphere likes to let us know that the cost of solar will continue to decline over time.
While this trend has held steady for the last several years, the ultimate answer is a bit more complicated than that. Consider that solar panel prices can’t realistically fall much further from here.
Consider also that copper (used quite extensively in solar installations) is a commodity that is trending up.
Of course, we are in the nascent stages of a housing recovery. During the last several years, construction of new homes and buildings has been at record lows thanks to the housing crash and ensuing ‘Great Recession’.
As a result, solar companies have had the opportunity to take advantage of depressed labor wages.
Unfortunately, this too, is about to come to an end as housing starts continue to rise and demand and competition for skilled labor increases.
This upward pressure on wages will impact the cost of solar installations negatively in years to come.
Also looming a couple of years off is the end of the Solar Tax Credit. This Federal tax credit gives buyers essentially 30% the cost of a solar system.
Therefore, once this tax credit sunsets, a system that used to cost $21,000 after the tax credit will now cost $30,000 or 42% more! It’s the very same tax credit solar leasing companies take advantage of to give you those low monthly payments.
Expect those payments to go up as a result of the tax credit ending.
Speaking of solar leases, a very real trend we’ve noticed over the last couple of years is the trend of kilowatt hour prices from the leasing companies increasing as the utility companies increase their rates.
Think about it. All the solar leasing companies need to do is provide power for ‘less than the utility’ is currently charging you.
The leasing companies typically trail utility rates by 10-20%.
Therefore, as utility rates increase at their historic pace of 6%, you can expect rates from leasing companies to trail at the very same rate.
We mentioned that panel prices can’t drop much further than they already have.
In fact, many manufacturers are selling solar panels below the cost. This in itself is not sustainable, but the picture gets bleaker.
In February 2013, the world’s major manufacturers of solar grade silicon, announced across the board production cuts to alleviate the ‘glut’ of polysilicon. The same glut, in fact, that has contributed to solar panels’ spectacular pricing free fall.
What does this mean? It can only mean one thing – higher prices.
Lastly, the rebates in California are running out years ahead of schedule. PG&E and SDG&E have already used up all of the California Solar Initiative refund money. SCE will be out of money by summer 2013. No rebates means higher prices.
With solar there is always a cost to wait, but now that cost has become acute and will sting more for those who continue to put off a decision to go solar.
The time to go solar truly is now.
It’s never been more affordable and it’s unlikely to stay that way much longer.
To Getting While The Gettin’s Good!
P.S. -Thanks for taking this journey with me! I hope you have learned a ton about the solar industry and will be totally prepared when it comes time to put solar on your home. Keep an eye on your inbox, because if I ever run across more important information in regard to energy efficiency or solar energy, I’ll be sure to send it your way.
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