Green Technology: Solar Power Costs Fall 40%

There are brighter days ahead for solar shoppers these days. The price of installing solar power is perhaps not 'right', but it's certainly getting better.

Solar Panel prices have fallen about 40 percent since the middle of last year, driven down partly by an increase in the supply of a crucial ingredient for panels, according to commodity analysts.

The price drops, coupled with governmental support and incentives, could reduce the payback and return on investment (ROI) time. It can take solar panels a minimum of 16 years to pay for themselves and up to 22 years, in areas with higher electricity costs. That calculation does not include any 'green grants' or rebates, which will improve the economics considerably.

Consumers have the rest of the world to thank for the big solar price break. Until recently, panel makers had been constrained by limited production of polysilicon, which goes into most types of panels. Now, more factories have opened up that make the material, as have more solar panel assembly and production plants. Unfortunately most of these are in China.

At the same time, the global demand for solar panels has slowed enormously, particularly in Europe, previously the largest solar market. Photovoltaic installations in Europe are forecast to fall by 26 percent this year, compared with 2008.

Much of that decline can be attributed to a sharp slowdown in the Spanish market. Faced with high unemployment and a growing economic crisis, Spain slashed its generous subsidy for the panels last year because it was costing too much.