The Solar Roller Coaster Yields
The solar industry has been riding a roller coaster over the past decade. Beginning with stratospheric poly-silicon prices and growing demand, the industry first hit a period of robust governmental subsidies, and market and investor hype. Typically, one might have expected an era of growth and stability to follow. Instead, the industry was beset by the financial crisis, the elimination of feed-in tariffs and other subsidies by governments seeking to marshal resources or avoid defaults during the European debt crisis, cheap natural gas, the much-maligned inexpensive Chinese imports of solar panels, a plummeting price of poly-silicon and a steady drumbeat of bankruptcies seeking to re-set long term…show more content… As a result of these falling costs, cumulative installations increased from 1.7 gigawatts in 2009 to approximately 11 gigawatts by the end of 2013 .
Looking ahead, module costs will likely continue falling as manufacturers realize greater economies of scale. Even so, larger opportunities for cost reductions exist in financing, customer acquisition, installation, regulatory incentives, and approvals that represent nearly half of the installation cost for residential systems in the United States. By some estimates, solar costs could drop to $2.30 by 2015 and to $1.60 by 2020, putting solar within striking distance of new construction for traditional power-generation technologies, such as coal, natural gas, and nuclear energy, both in the residential and commercial segments where solar is already cost competitive, and in the industrial and wholesale markets.
One persistently high-cost area for solar development and installation has been the cost of capital for solar projects. For many years, developers in the United States relied on complex tax equity investments or expensive bank debt to fund their projects, as they have had difficulty tapping into cheaper sources of capital due to the lack of long-term data on solar power, and the perception of solar being a risky and unproven form of energy. Even then, the availability of tax equity has been choppy, with the financial crisis.
Today, those factors seem to be changing, resulting in an advent of lower