The total “cost-of-production” of solar modules have dropped 60% from 2011 to 2014. Reduction in processing costs and a lower price of polysilicon, a main component in solar panels, were the primary causes for the recent dip in prices and led to solar now being cost-competitive with fossil fuels. For the first time in recent history, solar is as cheap an energy source as fossil fuels.
But prices for solar are not done falling. By 2017, the cost of solar is expected to drop another 40 percent, according to Deutsche Bank analysts (Source Cleantechnica). But can the same be said for fossil fuels?
Lower manufacturing and installation costs, as well as a decrease in inverter costs, and an increase in efficiency are expected to drive the price of solar lower than ever before. Better trade agreements with countries that export solar panels, and reduced transportation costs, will help solar reach that 40 percent reduction in cost that analysts are expecting. In countries with mature solar markets, such as Germany, this 40 percent drop has already been seen.
What all this means is not only will solar be cost-competitive with fossil fuels, but it has the potential to be cheaper, and in many places already is.
Take Saudi Arabia for example. Saudi Arabia is one of the biggest exporters of fossil fuels, but it is also poised to be a leader in solar energy. With the construction of a 260 megawatt peak solar PV plant in Dubai, ACWA Power, a Saudi Arabian power company, will break the record for lowest solar prices. In fact, solar energy from this plant will be 30 percent cheaper than electricity produced from gas in the United Arab Emirates. In parts of the United States, such as California and states in the Great Plains and Southwest, solar power is also already cheaper than electricity produced from fossil fuels.
The price of solar continues to decrease, but the same cannot be said for fossil fuels. Natural gas and coal are the primary source for electricity in the United States. If you are expecting electricity prices to drop from facilities that use these as a source, you will be waiting forever. In fact, the cost of electricity from coal and natural gas increased 2.5 percent from 2014, and people can expect to pay 5.9 percent more for energy this summer than they did last summer, according to the U.S. Energy Information Administration. (Source = http://www.eia.gov/forecasts/steo/report/electricity.cfm) These price increases occurred despite the fact that natural gas actually became cheaper. Maryland already has one of the highest electricity costs at 13.7 cents per kilowatt hour, a price that is only expected to increase for you.
The situation eventually will become dire for fossil fuels, because they are not a renewable source. The sun is an infinite supply, at least for the next 5 billion years or so. Fossil fuels are finite, meaning they can and will run out, possibly within our lifetime. And we all know what happens to things that become rare, like a Babe Ruth baseball or a 1962 Ferrari 250 GTO Berlinetta. They become expensive, ridiculously so, like the Berlinetta that sold for $38 million in 2014.
While we may not be at the critical point and still possess a hefty amount of reserves, the fact remains that fossil fuels will continue to rise in price and will eventually run out, perhaps even in our lifetime. But the price of solar continues to decline, and in some places is already cheaper than fossil fuels.
Now that is the kind of math everyone likes.
Now is the time to invest and convert to solar. You can stick with coal and natural gas and pay an exorbitant amount of money, or you can make the smart financial decision, switch to solar today and start saving now.