Timing is everything in the purchase of solar panels in California: federal tax credits have grown, state rebates decline over time and, for now, manufacturers are offering price cuts to get oversupply moving, notes the Los Angeles Times.
But, even with price slashing, a home solar system can still cost in excess of $20,000 (compared to the original price of $45,000 without financial incentives, based on Los Angeles Times’ calculations); that can be a steep price for homeowners worried about potential job loss or home loss because payback on solar energy investments, even with incentives, can take decades.
The biggest hurdle to increased solar deals under manufacturers’ price-cutting, however, may be the persistent credit crisis and the reluctance of financial institutions to fund installations in the still-uncertain economic climate. One solar company executive, quoted in a Popular Mechanics article on solar materials research, predicted as many as 10 percent to 15 percent of current solar orders may default.
Outlook for Solar Energy
Until costs for solar systems come down more, credit eases, and homeowners gain assurances about the economy and their longevity in their current jobs and homes, home solar energy systems are riding a tide of innovation aimed at giving consumers leverage.
A San Francisco Bay-area company, One Block Off the Grid, organizes households into loose “collectives” to achieve more advantageous solar installation costs and prices for consumers.
California legislation approved last year gives residents of most cities and counties the ability to repay low-interest solar energy loans through their annual property tax assessment (which, depending on the finance rate, can mean paying something like $3,000 a year extra in the property tax bill over 20 years); if the homeowner sells the house, the loan burden falls to the new owner.
But, even with a host of government financial incentives and creative efforts to bring down costs and increase consumer latitude in negotiating price breaks, “growth” of this industry is relative.
According to Lawrence Berkeley National Laboratory researcher Cyrus Wadia: “Even if the solar cell market were to grow at 56% per year for the next 10 years—slightly higher than the rapid growth of the past year—solar photovoltaics (the most familiar solar energy systems) would still only account for about 2.5% of global electricity.”
Wadia led a new LBNL-University of California study, reported here and here, that focused on the raw materials used in the manufacture of photovoltaics and how these may serve as a constraint in the longer term outlook for solar energy.
In manufacturing solar panels, three materials currently dominate the market: silicon, cadmium telluride (CdTe), and thin-film technology based on copper indium gallium selenide (CIGS). Silicon, while abundant, is costly to convert to the usable crystalline form and the other two options are scarcer and extraction costs are higher, the researchers noted. Rather than try to spur market demand within the constraints these raw materials establish, the researchers suggested that a worthwhile expenditure of R&D funds could lay in going back into the lab to find other raw materials for making solar systems; even lower efficiency materials, if cheaper, might be better for fostering long-term growth of solar energy, they said.
Besides high costs and expensive materials, solar energy’s potential for cleanly providing energy may be crippled by a tendency to pit this energy source against all others. Utility executives at a 2008 Arizona energy conference emphasized that solar energy is likely never to reach a scale where it can meet a substantial portion of world energy demand (projected to grow 50 percent to 60 percent over the next 25 years). Nor is it likely to be cost-competitive with other energy sources in the foreseeable future.
But, far more important, they said, is appreciating the vital role solar energy can serve as a supplementary source, in helping to reduce (“shave”) demand during hot temperature conditions. The highest solar energy production happily occurs when the sun is shining hot and bright, and demand for air conditioning is at its peak.
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