US consumers poised to capitalize: Residential Solar in 2011

US consumers poised to capitalize: Residential Solar in 2011

If you want to look into the future of sustainable energy in the United States, look at solar power. If you want to look into the future of solar power, look at the prices for solar panels. If you want to look at the future of solar panels, look to China.

Generally, most solar manufacturing capacity takes place in China, where low-cost labor allows companies to produce cheaper products. Beyond cheap labor, lucrative partnerships with governments in that country allow solar panel companies to take out favorable loans from state-run banks, according to a recent New York Times article. ["Solar Panel Maker Moves Work to China," Jan. 14. Online.] These conditions have placed China at the epicenter of solar panel production, with its manufacturing capacity comprising more than half of global production in 2010. US-based energy analysis firm GTM Research puts China's share of the US solar panel market at 23 percent in 2010, with that number projected to continue rising, according to the same article.

Back at home, recent developments in solar technology and the proliferation of solar companies in states like California, Arizona, Colorado, and New Jersey have put residential solar on the minds of many US homeowners. Companies such as San Francisco-based SunRun have led the push for integrating solar energy into consumers' homes. Meanwhile innovative pricing plans along with government incentives to go green have put formerly prohibitively expensive upgrades within reach for many homeowners. Industry research firm IBISWorld estimates revenue for the Solar Power Generation industry grew at an annual rate of 6.9% in the five years to 2010 as consumers and businesses generated power from solar. Also, developments in solar panel demand overseas are shaping up to reduce the up-front costs of solar installation.

If the above conditions have you burning to go green, here's a few things to consider before cancelling your utility service. Regardless of any hype surrounding the matter, solar affordability ultimately depends on the cost of solar panels, electricity prices and the financing methods available for system purchases.

Cost of solar panels

Currently, Chinese solar manufacturing companies have yet to move surplus inventory created during the recession. These companies over-produced solar panels in 2007 and 2008 with the expectation that solar markets would thrive during 2009. As a result, low-cost panels are available, which in turn lowers the up-front costs of solar power generation for customers. Panel prices have fallen from the high range of $3.50 to $5.00 a watt during 2008 to an expected $1.55 per watt in 2011.

Further, these upstream solar panel producers have largely been selling to European countries over the past five years, where impressive solar power generation growth has been pushed by generous country-specific subsidies. Known as feed-in tariffs (FITs), the subsidies pay solar power producers well above retail rates. Countries such as Germany, Spain and Italy all boast FIT programs. Unfortunately for solar panel producers, the European debt crisis and related financial difficulties have caused governments to impose austerity programs in an effort to reign in large deficits. Since governments are paying a high premium for solar power, many European governments have cut back on FITs. For example, Germany's FIT was reduced twice in 2010 to a total of 15% for freestanding solar facilities and 16% for building-mounted systems. Further cuts are expected.

Decreased demand from solar power-generation firms in European countries will reduce industry revenue for solar panel manufacturers. In turn, these manufacturers will lower prices to meet dwindling demand and seek out other markets in which to sell their products. Solar markets outside of Europe (i.e. America) lack generous subsidies like FITs. As a result, relative slow growth in these other solar markets will also serve to lower panel prices. The US government's 30% federal tax program will still induce large solar power producers to develop US solar projects, and these players will still demand solar panels. New technologies are avoiding photovoltaics (PV) in favor of concentrating solar power (CSP). CSPs are cheaper on a per KWh basis than PV plants, and large power producers are likely to use this technology as opposed to PV, which will also lower the cost of solar panels by shifting demand.

Click here todownload theFREE full IBISWorld report on residential solar.

POST COMMENT

5 More New Trader Pitfalls You Can Keep away from Installing Monster Energy Stickers Promoting Sales Performance with Monster Energy Stickers Succeeding With Monster Energy Stickers Industrial-style Food Production is Energy Inefficient and Depends too Heavily on Oil Skinny Gazelle Weight Loss Energy Drink How To Choose A Solar Power System To Assist With Energy Costs Tenevis Footwear just unveiled their new men's collection! Back Pain Relief & Body Toning Shoes for Men! Five Quick Tips to Taking Advantage of Google's New Algorithm Great New Homes Does Not Need To Be Expensive Are You Ready To Enter Into A New World Of Gaming? LocalBlox, a new social networking site brings the Internet and Main Street Together Stream NHL Watch Toronto Maple Leafs vs New York Islanders Online Live via PC