Solar Energy Economics

Everybody should know by now that solar panels convert sunlight into electricity, though most people don’t have a clue about the photovoltaic (PV) effect… and that’s not really important anyway. All that really matters to most people is that it works, it’s reliable, cost effective and it contributes to a cleaner and more sustainable planet.


Though prices had been decreasing steadily for years, in 2010 solar panel prices really started dropping dramatically due to increased manufacturing capacity and a dramatic decrease in the cost of crystalline silicon – the primary material in a solar cell. As a consequence, the economics of generating power from the sun improved substantially, resulting in massive increases in capacity as seen in the graph. To the point that in 2016, solar was the largest source of new generating capacity in the U.S…a staggering 40%!

One aspect of solar energy economics that doesn’t occur to most folks, is the high level of security and safety of the return – after all not many returns are more secure than a cash flow based on the sun rising. And while there is no guarantee what your utility will be charging for electricity in 5, 10, 20 and more years from now, it’s going to be higher, meaning savings may grow substantially.

As of this writing, the 30% Federal Tax Credit is still on the books, and combined with other local incentives, the net purchase cost of a system represents one of the best investments you can make, not just in your home, but in this little place called Earth 🙂

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