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How Much Does Rooftop Solar Power Cost? Grid Parity Here or Coming in More Than Half of U.S. States

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Predicting the arrival of solar energy for electricity that is as cheap as local electricity prices is actually harder than predicting the sunrise. But UCS’s new solar infographic tells this exciting crossover point is right in front of millions of homeowners across the country.

What’s going on up on the roof?

For more than 120 years, homes and businesses have been buying electricity. Now rooftop solar electricity production is changing the way hundreds of thousands of homeowners get energy. Most have added solar panels because this makes money, and that motivation will keep growing and spreading.

Small-scale solar photovoltaic (PV) systems on rooftops have suddenly become the most commonly built, most numerous electric generators, with individuals making decisions based on the cost of the solar panels and the price of their local electric utility.

Over half the states could have rooftop solar that’s as cheap as local electricity prices by 2017

UCS estimates that with rapid declines in the cost of panels and installations, homes in 11 states plus the District of Columbia can use a federal tax credit and financing to make electricity cheaper than they buy it. Seventeen more states are within three years of this tipping point. This map shows where.

solar-power-panel-2-485

This is big news! Some say it is the end of the old ways, a revolution.

How do we reach that conclusion? We start with two National Renewable Energy Laboratory (NREL) analyses of break-even for an investment in PV (solar photovoltaic) panels compared with paying the residential rate for electricity. We picked through the NREL studies as we were producing our own update on the rise of solar energy. In their analysis, NREL assessed the available sunshine, projected current and future local electricity prices escalating 0.5% per year, and included financing and federal tax incentives to determine what the cost of solar (in dollars per watt) would need to be to reach break-even.

What was really missing from these NREL studies is a projection of when the break-even point is likely to be reached. Not faulting the lab, just saying that when UCS compared the NREL numbers on break-even costs and other organizations projections of prices, this all became more clear. And much more interesting. Now anyone can look at the map and see there are going to be some changes coming.

NREL’s analysis (and therefore ours) is conservative in some important ways:

  • No state or local incentives are used. Including existing state tax incentives available in 45 states, or other local support for solar generation would lower the break-even cost for a residential PV system (net present value).
  • Some utilities have an optional time-of-use rate structure that also would improve the economics of residential solar. The benefits of this can be seen in this analysis.
  • Also not included in our take on the NREL numbers is a price on carbon, which would recognize a value of avoiding emissions.

Deutsche Bank and NRG have come to very similar conclusions with their own analyses, while others like Citigroup predict continued declines in the cost of solar panels, global demand, and inevitable price parity.

How soon can you get solar?

New energy supplies are often known long before they become practical and economical. Wind power, nuclear power, and shale gas all had been identified as potential energy supplies but were considered too expensive. Wind power and shale gas have come way down in price. Now solar is making its move. And rooftop solar is crossing the threshold, and a solar boom is underway.

If you are interested in getting solar panels on your roof, ask for a quote from a solar firm.  Since our map did not include state and local incentives that can accelerate the economics, you may get an even better answer. Keep in mind that the NREL assumption about how energy prices will change is only an assumption.

Unlike most energy supply decisions, the choice of rooftop solar is within your control. If you want to adjust your economics to recognize carbon savings, you can do that too, with this energy choice. There is so much that changes when solar becomes cost-effective. This is just getting started.

 

Posted in: Energy, Global Warming Tags: , ,

About the author: Michael Jacobs is a senior energy analyst with expertise in electricity markets, transmission and renewables integration work. See Mike's full bio.

Support from UCS members make work like this possible. Will you join us? Help UCS advance independent science for a healthy environment and a safer world.

  • http://www.gradingspaces.com Mk1st

    I live in Wisconsin, one of the “near-term” states in the info graphic. A disturbing development however is the news that some of the big utilities are angling for a way to increase base charges as a bulwark against perceived future losses due to small-scale renewables. In addition, they are fighting against third-party leasing of solar systems. Their argument, familiar I’m sure in other parts of the country, is that they need to recoup losses they will see due to these systems yet still maintain the grid infrastructure. Those costs do exist, but I’m at a loss to understand how they see solar as a threat. Why not embrace the change and become the change. Why are they not seeing an opportunity to be the lessee and offer these systems to homeowners? Perhaps some arcane law prevents this for public utilities but it still doesn’t warranty the very negative image these companies are showing lately.

  • Poechewe

    As solar and wind reach parity in more and more places, the economics of this era are rapidly changing.

    Citibank has a report out called, “The Revolution Will Not Be Televised as Disruptors Multiply.” The essence is that oil is losing its competitive advantage when it comes to energy uses. Another interesting thing about the report is that capital costs for building alternative energy systems are dropping, but nevertheless capital costs for nuclear remain a problem. It’s not hard now to see the future.

    It’s clear that pension funds and university endowments should be moving more quickly towards divesting from oil companies. Solar and wind are no longer just environmental solutions. They are now not only an economic opportunity for investors but also a path forward to cheaper energy and monthly relief for those with low and middle incomes.

  • David Howes

    Fun facts about Solar Power: every two years (give or take), the number of watts produced by solar power doubles, since the 30′s . More solar panels have been installed worldwide in the past 18 months than in the previous 30 years. In June, 2014, German produced 50.6% of its electricity for approximately 2 hours in the mid-afternoon. Most of this power was produced by residential panels. Researchers expect to beat this record every few months as more and more panels are installed.
    In order to power the entire world, we’d need to cover an area roughly the size of West Virginia. For the whole world.

  • anticarbon

    Pricing for solar has already dropped so low that even with the 30% federal ITC, it makes financial sense with a payback of less than 6 to 7 years. For example: New Hyper X 2 solar systems are priced so low at $2.29 per watt before incentives that paying the grid’s every increasing rates, no longer makes any financial sense.

    Hyper X 2 solar modules are less than a 1/4 inch thick. and offer a competition killing 92.88% PTC to STC ratio. Hyper X 2 also offers a heat busting -0.31%/degree C temperature coefficient for better performance in warm/hot climates. And when it comes to aesthetics, nothing even comes close to Hyper X 2′s glass on glass, see through, frameless construction.

    With N-type mono-crystalline bifacial cells for double sided power production, up to a 21.5% efficiency rating, and a price that absolutely crushes the competition’s offerings, Hyper X 2 spells the end to the reign of the solar lease and PPA companies. http://vimeo.com/103621981

  • http://www.theenergyfix.com/ Jim Pierobon

    If a looming shortage of solar panels doesn’t interrupt this trend, the cost of installed
    solar should continue falling while electricity rates will likely continue
    rising, even in relatively low-cost states such as Virginia. Interested
    homeowners should move to install and turn on their solar systems BEFORE the
    scheduled reduction in the 30% federal Investment Tax Credit to 10% effective
    January 1, 2017.

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