Understanding Solar Power Cost: The Economics Of Sunlight

by | Apr 6, 2024 | Renewable Energy, Solar Energy

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Solar power cost has become more affordable in recent years, and in many areas it is now less expensive than coal or other fossil fuels. Solar installations are on the rise around the world as a result of considerable tax incentives and subsidies.

Accumulating Economic Costs

While the United States spends more than $1 trillion annually on fossil fuels, the negative consequences of burning them continue to accrue economic costs. The United States spent $649 billion on fossil fuel subsidies alone 2015. According to research, air pollution in Europe costs the economy $1.6 trillion per year in diseases and deaths, according to a new WHO study. When combined with healthcare costs and environmental deterioration, the actual cost of fossil fuels is projected to be $5.2 trillion per year worldwide.

Solar-Power Adoption

Until recently, solar energy systems were only available to the wealthy or fanatical. However, ubiquitous access to solar panelling systems is becoming possible thanks to dramatically lower costs. In the early 2000s, the average US solar power cost was $10 per watt.

solar power cost

In 2017, IRENA released research titled “Renewable power generation costs in 2017,” which stated that the cost of solar photovoltaic (PV) has dropped to $0.10 per kWh.

The United States Office of Energy Efficiency and Renewable Energy aimed to make solar power cost-competitive with conventionally produced electricity by 2020, without subsidies. As of 2017, the cost of utility-scale photovoltaic (PV) solar power had reduced to $0.06 per kilowatt-hour. The solar power cost targets for residential and commercial solar had been reduced to $0.16 and $0.11 per kWh, respectively.

Finally, the number of photovoltaic systems installed in the United States has skyrocketed in residential and commercial applications. From 2008 to 2021, solar capacity increased from 0.34 to 97.2 gigawatts.

Understanding the Economics of Solar Power

Despite tremendous technological advances, sustainable energy has yet to replace traditional fossil fuels. To motivate the use of renewable energy, governments have issued tax credits for solar and wind power, which were formerly significantly more expensive than the status quo.

However, due to increased production, government subsidies, and growing environmental concerns, customers’ solar power cost and wind energy have declined. Some markets offer customers renewable energy at a lower price than fossil fuels. Wind energy, such as wind farms, is primarily used commercially, but solar power has commercial and domestic uses.

Solar Power Cost

Though renewable energy accounts for a small portion of total energy consumption, the United States is the largest renewable energy consumer. Nonetheless, despite the rise in available solar energy over the last decade, solar still accounts for only 2.3% of overall energy consumption in the United States. Solar power is also behind hydropower and wind as favoured renewable energy sources, accounting for 11.5% of total US renewable consumption in 2019.

In the United States, the Renewable Energy Tax Credit reduces the tax burden for solar energy adopters. Depending on when the system was installed, taxpayers can claim a credit of 30%, 26%, or 22% of qualified expenses for systems serving occupied spaces. Similarly, the U.S. government extends this credit to wind and geothermal systems. According to Popular Science, solar energy is now estimated to be the most cost-effective energy source in the United States, with prices as low as $0.70 per watt.

Seemingly, running a household solely on solar power would pose challenges, particularly without electricity during nighttime hours. Estimates suggest that, on average, solar panel installation for a typical residence ranges from $15,000 to $20,000 before incentives are factored in. The feasibility largely depends on the dynamics of the local energy market.

Currently, only two forms of solar technology can turn the sun’s energy into power: solar thermal and photovoltaic. Solar thermal collectors heat a residence or water using the sun’s rays. Photovoltaic gadgets use sunshine to replace or complement electricity.

In conclusion, individuals, large corporations, and governments have all committed significantly to renewable resources. Aside from solar energy, firms like Google and Amazon have committed to using wind to power their buildings. With huge organisations, individuals, and governments continuing to move to renewable energy sources, the adverse environmental effects of burning fossil fuels should be mitigated.

Also Read: Solar Energy Tax Credit: Powering Savings In The US

 

Author

  • Michael Thompson

    Michael Thompson is an esteemed expert in the renewable energy sector, with a profound experience spanning over 25 years. His expertise encompasses various sustainable energy solutions, including solar, wind, hydroelectric, and energy efficiency practices. Michael discusses the latest trends in renewable energy and provides practical advice on energy conservation.

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