Are solar panels expensive?

Researcher analyzes thin-film cadmium telluride solar cell at General Electric's Global Research Center in Niskayuna, New York. The compound is cheaper to use for photovoltaic material than silicon.

Are solar panels expensive?

Researcher analyzes thin-film cadmium telluride solar cell at General Electric's Global Research Center in Niskayuna, New York. The compound is cheaper to use for photovoltaic material than silicon. Technology, finance and knowledge could make it cheaper to take advantage of the sun's rays. This story is part of a special series that explores energy issues.

For more information, visit The Great Energy Challenge. The sun has serious power. Even taking into account all the energy that is lost in space, it reaches Earth in an hour enough to power the entire planet, theoretically, for a year. So why doesn't the world harness all this energy? In Germany, a country with a much stronger government incentive program, the share of solar energy is much higher, but still only 1.1 percent of that country's electricity.

And, while most scientists agree that solar energy will be an important part of the future energy mix, there is no clear consensus on when it will be able to compete on a large scale. In fact, experts don't even agree on how much solar electricity costs today. Think of any simple item, such as a shirt. A buyer may know how much they have paid for it, but that doesn't mean that the consumer knows how much a shirt costs, in general.

That number can vary widely, depending on the type of shirt and where you buy it. The cost varies depending on the technology being used and where it is installed. The situation is very different in Phoenix, Arizona, than in Albany, New York, and it looks very different in Seville, Spain, than in Leipzig, Germany. The reasons for those differences are fairly easy to understand, but sunlit geography is just the beginning, says Seth Darling, a scientist at the University of the United States.

Department of Energy (DOE) Argonne National Laboratory in Illinois. A standard way of thinking about the cost of electricity is “the total leveled cost of the system,” basically, how much an energy producer would have to charge for electricity to recover the money spent on building a new generating plant. With such a wide range in potential rate of return, it's not always easy to find a bank that will provide that loan, says Ed Regan, assistant general manager of strategic planning for Gainesville Regional Utilities (GRU) in Gainesville, Florida. GRU helped Gainesville residents get around that problem by implementing a food tariff, a system in which a utility company offers solar panel owners a 20-year contract to purchase solar electricity, ensuring that homeowners will earn a fixed benefit with your decision to opt for solar energy.

There are other alternative financing options, such as allowing the utility company or a third party to purchase and own the solar system, while the homeowner houses it on the roof, but these options aren't available everywhere. Converting light into electricity without moving parts is a profoundly different undertaking than converting a turbine to make energy the technology that works in coal plants, natural gas, nuclear power, hydroelectric power and, more visibly to the public, in wind farms. That's not true yet for solar energy, experts say. Most solar cells are made of silicon, the same semiconductor material found in the heart of computers.

Cells are expensive to produce because it takes a lot of energy to purify silicon. And, while the computer industry has made tremendous strides in manufacturing cheaper silicon devices, those advances don't translate to the solar industry. What can really help reduce the cost of solar energy are new materials, especially semiconductors made from the cadmium telluride compound. It is cheaper to make “thin film” solar cells with cadmium telluride than with silicon.

But that still leaves what experts call “soft costs,” from permit fees to hardware that mounts solar panels on a roof. Although there is disagreement over how much of the price of solar energy is linked to these soft costs, they are clearly an important factor. In fact, Ryne Raffaelle, director of the National Photovoltaic Energy Center at the National Renewable Energy Laboratory, says that the solar panel itself represents only half the cost of a solar system today. Innovations that could reduce both direct and soft costs happen all the time, but they don't necessarily reach customers quickly.

On the one hand, not all the big ideas that work in a laboratory can be replicated on a mass production scale. And it can take a long time to eliminate technological problems in a device that the manufacturer wants to be sure will last a long time. However expensive it is, solar electricity can already be competitive to a limited extent. In Hawaii and parts of the southwest, solar energy has already fallen below “grid parity”.

Essentially, that means that solar energy can be produced and sold for less than the average electricity tariff. This works because electricity is already expensive in those places, and because the locations are ideal for producing solar electricity on many clear, sunny days. Even in places where the average cost of electricity is low, that cost varies by season and time of day. Maximum load electricity, the energy that consumers consume in the middle of a hot summer afternoon, for example, costs much more than the average electricity cost of a region.

Maximum charge times coincide with peak hours of sunshine. If the system were designed to encourage the use of solar energy to cover peak loads, the cost savings would be substantial, he says. But the question for most consumers is when will it make sense to put a solar panel on the roof. Partly because of problems in estimating tiered cost, there is no clear answer at this time.

In fact, the right answer could change over time. For example, thin film cadmium telluride panels could help solar energy reach grid parity before silicon panels, but tellurium, a key ingredient, is quite rare. If the production of cadmium telluride solar panels increases substantially, it could trigger a shortage of telluride, raising the price of that type of panel. If the solar industry has become dependent on the short-term, low-cost cadmium telluride option, the long-term shortage could end up causing solar electricity to go out of grid parity for many people.

But Argonne's Seth Darling says the United States isn't likely to see hundreds of gigawatts of solar energy running on grid parity until 2025, at the earliest. The main factor in determining how much money a solar panel system will save you in the long run is the cost of electricity, which can vary significantly depending on your location. Interesting work is being done in this area to maintain costs and delay in obtaining an approved interconnection. Department of Energy's SolarApp+ is trying to make the interconnection process cheaper and faster for everyone.

Once you know how much a solar energy system will cost upfront and how much energy it will produce, you can (theoretically) predict how much you can save in energy costs per year. However, the most important factor in determining how much money solar panels will save you is simply your local electricity rates. However, the cost of solar energy in the U.S. UU.

is still higher than that of other countries, especially Australia. Solar panels and microinverters are a 1 to 1 system, which means that each panel is connected to its own microinverter. After signing your solar contract, an engineer (probably an employee or subcontractor of the installer you're working with) will stop by your property to inspect your home and make sure everything is compatible with your new solar system. Other equipment required for the installation includes an inverter (to convert the direct current produced by the panel into the alternating current used by household appliances), measuring equipment (if necessary to see how much energy is produced) and various housing components along with cables and wiring equipment.

A photovoltaic solar panel can be very beneficial in areas where this type of time-varying rate is used, since the solar energy produced would compensate for the more expensive electricity. Naturally, solar energy would achieve grid parity faster with policies that take these costs into account when imposing a carbon tax or price. In addition to cleaning the panels regularly, inverters and batteries (if installed) generally need to be replaced after several years of use. In addition, having a low-complexity roof in good condition will help reduce the labor share of solar energy prices.

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