Cost Of Solar Installation Continues Drop

February 20, 2009 10:34 a.m. EST

Berkeley, CA (AHN) - A study by researchers at the Lawrence Berkeley National Laboratory, which reviewed the costs of 37,000 photovoltaic systems across the U.S., discovered the average cost of installation has decline to $7.60 per watt in 2007.

Nine years earlier, the cost was at $10.50 per watt. The figure covered both residential and business installations, although it excluded incentives provided by state or federal governments.

Home-sized solar panel systems, though, were more expensive with an average price of $8.30 per watt, which translated into an installation cost of $24,900 for a residential unit with a capacity of 3 kilowatts.

The study, released Thursday, debunked the myth that solar prices were escalating over the years because of the global shortage of silicon used for production of solar panels.

Despite the falling prices of solar panels, it is still too expensive for many American households. According to Severin Borenstein, director of the UC Energy Institute, said average cost must go below $5 a watt for solar power to be competitive with other alternative sources of electricity.

Aside from the lowering cost of installing solar panels, development of alternative energy sources are expected to be given a boost with the economic stimulus package signed on Tuesday. The nonprofit group Environment California estimates almost $79 billion is expected to be invested in renewable energy, green transportation, and energy efficiency under the American Recovery and Reinvestment Act.

The legislation permits developers of renewable energy projects to swap their current tax credits for cash grants from the Department of Energy.