Economics

Solar Energy Economics

More solar energy capacity was installed in the U.S. in 2012, than the years 2000 – 2010 combined, and now powers the equivalent of more than 1,000,000 average homes!

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, it’s cost effective and for many, in their own way, they are contributing to a cleaner and more sustainable planet.

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Though prices had been decreasing steadily for years, in 2009 solar panel prices really started to drop due to increased manufacturing capacity and a dramatic decrease in the cost of crystalline silicon – the primary bulk material in a solar cell. Since then, solar energy economics and the return on investment (ROI) have increased substantially. Today panel prices comprise roughly 25 – 35% of installation costs, down from roughly 60-70% three years ago – meaning Texas residents and businesses can expect their solar installation to generate power at a cost that competes with even the lower rates we’re experiencing today.

One aspect of solar energy economics that doesn’t occur to most folks, is the high level of security and safety of the return. If one measure of security is the guarantee of long-term cash flow – what could be more secure than a return based on the rising of the sun? 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 the savings from energy supplied by the free fuel from the sun, will be substantially greater.

An ‘under-appreciated’ aspect of a solar installation, is the appreciation that occurs to the property due to the decreased operating costs. Recent publications of the Appraisal Journal state that a home’s value can increase by $20,000 for every $1,000 reduction in annual operating costs due to efficiency improvements.

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