Living in the era of Moore's Law, we have become accustomed to dramatic technological advances within the span of a few years. Gadgets get smaller, faster, brighter, and lighter before the end of the useful life of our existing gadgets. Companies announce a new system or product and our once shiny new device begins to look embarrassingly dated. Some people look at solar technologies in a similar fashion. Installing them today appears to mean risking missing out on something better that is right around the corner. They don't want to be early adopters and have expensive or clunky panels on our roof. We find however that installed solar systems don't follow the same trends that consumer electronics have been following.
First of all, two very distinct and different forms of solar energy systems are suitable for use on homes today: solar thermal which heats water and solar PV which creates electricity. Solar thermal systems are over 100 years old and solar PV is 50 year-old technology. Both types of solar systems have proven themselves to provide sufficient energy in every climate, with little maintenance, under stressful environmental conditions, safely, and with no added fuel cost. In the rush to find something better, we forget that solar is a mature technology that can create all the energy we need at a home today.
Part of this line of thought is that improvements in technology will create significant price drops. This is not likely in the near term however. The United States is not a world leader in solar energy and the countries that are, command the lion's share of the available components. These countries (Germany, Japan, and Spain) have seen the advantages of solar energy earlier than us and have taken decisive steps towards growing a solar-based economy. What this means for world prices is that the market has much more demand than available supply. As the US market realizes the value of solar, price pressure will remain high. Not until more manufacturing capacity comes online (a multi-year proposition for such a high tech collection of products) will prices drop significantly.
Even more importantly than stable material costs, effective solar energy systems are much more than solar panels. There is also a significant materials cost in the balance of system materials that make up a complete unit. Many of these pieces are commodities (copper, aluminum, glass, steel) that are subject to variable pricing completely independent from the solar industry.
Systems also must be designed, reviewed, and installed by competent people. Labor and administrative costs are similar across the building industry and form a large part of what someone would pay for a functioning system. An argument could also be made that this local labor component is actually another positive contribution that a solar economy can bring us.
Every year we wait to make solar a standard feature of our homes and buildings is another year we miss out on all the incremental cost savings, equity appreciation, and air quality enhancements to be made today. If not this year, then when?
Alex - this is exactly correct and one of the common "objections" that we hear from prospective clients - oh, if I just wait a year the systems will be better and I'll save more money.
ReplyDeleteAs you rightly point out, Moore's law does NOT apply to PV (since we don't get improvements by making individual components ever smaller) and the technology changes are, at best, incremental in a mature technology like PV.
On the other hand, as utility rebates deteriorate - at least here in SoCal - it is clear that waiting has real costs. Will costs go down next year - likely, but not as much as the delta on the lower rebate and the lost savings from not having had solar this year.
If not this year, when indeed!
Jim Jenal
www.RunOnSun.com