Why are solar panels/systems so expensive?
June 27, 2010 5:14 AM   Subscribe

Why are solar panels for the home so expensive? What makes them out of reach for most consumers-the technology, the difficulty of installation, or the parts needed to build them? What would be the key to making them as cheap as buying a microwave for example?
posted by ~Sushma~ to Technology (14 answers total) 5 users marked this as a favorite
I think the key to making them as cheap as a microwave would be volume. There would have to be enough people who want them in order to bring production up and bring costs down. Same as with most home appliances (like bluray players, and DVD before that), once the market started to get saturated the prices came down. IANAE(conomist).
posted by wabbittwax at 5:33 AM on June 27, 2010

It's the materials and the manufacturing techniques. Solar panels require carefully doped semiconductors to function, and there are a myriad of possible doping agents with different properties, and a lot of different production techniques possible. It takes time to work out which doping agent is best, and to find less expensive manufacturing processes for producing the photovoltaic cells. However, solar panels already have achieved "grid parity" in high insolation areas like Hawaii. And they're getting cheaper all the time.
posted by Salvor Hardin at 5:45 AM on June 27, 2010

Because they're complicated and use some rather unusual materials in their manufacture. We're talking micrometer-scale construction using silicon, gallium, indium, nanocrystalline metal oxides, etc.

It's true, demand permits manufacturers to capitalize on economies of scale, which decreases retail pricing. But they're probably never going to be as cheap as microwaves, because microwaves don't involve all that many interesting or exotic components. You've basically got a lot of ferric wires and some basic computing functions. It's a piece of piss compared to a highly efficient solar cell.
posted by valkyryn at 5:50 AM on June 27, 2010 [1 favorite]

Another issue for price are the converters. Solar photovoltaic panels create DC power - your home uses AC power. The converters are still expensive. Just like the panels, they are getting cheaper and better all of the time.

Also, keep in mind, nearly every other form of energy in this country is heavily subsidized. If tax-payers didnt foot the bill to build the hydro-electric power plant dam, and the power company had to pay to build the dam themselves, then what would the cost of electricity be? (Frankly, it would be too expensive for most people, which is why it is subsidized)

Solar is trying to take off with very limited subsidies. My state, Florida (the sunshine state) just recently passed a new energy bill, which further subsidized oil drilling in the gulf, but entirely killed solar subsidies. If solar every had even half of the subsidies that the oil and gas industry get, it would explode.
posted by Flood at 5:57 AM on June 27, 2010 [3 favorites]

New Jersey uses the second-most electricity after California. NJ is terrified of needing Cali's rolling brownouts and such, so the state incentives for going solar are pretty great right now. (Although, in truth, they keep, er, running out of money and thus needing to close the program again.)

As to your specific question of why they're so expensive, the answers above are all accurate. It's also labor-intensive—while our actual install only took two full days, there were repeated scouting visits and analyses: of our roof, its slope, its shading, our electrical consumption, etc. Even excluding the material cost, there's a lot of personnel cost, too.

If you *do* have the funds available to go solar, it's a wise investment. Our installation should pay us back within four years. If you plan to be in a home longer than the payback period on the installation, it's a green-friendly decision in two ways. And the more folks who go solar, the greater the supply, the cheaper the overall costs should get...
posted by lexfri at 6:33 AM on June 27, 2010 [1 favorite]

Good things mentioned above. Also, a solar panel is a different type of investment then a microwave. A microwave cost money to use and will die in a couple of years while a solar panel are almost maintenance free for 25 years.

The demands on materials and installation are obliviously higher for a solar panel but in total the difference in cost is not as big as it seems.
posted by furisto at 7:03 AM on June 27, 2010

yeah the comparison to a microwave is weird because the solar cells are producing energy you sell into the grid. The PV of a cell is positive, a microwave negative. At what point solar becomes a relatively sure NPV proposition is mostly a function of the issues others have said as well as the subsidy regimes going forward.

Solar is trying to take off with very limited subsidies
This is not correct - most large solar projects exist only because of subsidy.
posted by JPD at 7:15 AM on June 27, 2010

Higher volume sales would decrease the price of solar panels but I would be very surprised if they would ever become "cheap", at least not with the current technology.

Think about what a residential solar system does - it powers everything in your house. That is a huge job. The only other appliances that come close to doing that kind of work are heating/cooling systems but even their jobs pale in comparison.
posted by a22lamia at 8:49 AM on June 27, 2010

Wiki has a pretty interesting article on Solar Cells. It's expensive to produce silicon in high enough purity to be used. There is ongoing research to use less silicon or find cheaper ways to produce high purity silicon.

New Jersey uses the second-most electricity after California.

If this page is accurate California isn't first and NJ is 18th.

posted by 6550 at 9:58 AM on June 27, 2010

Solar panels are cheap! they're one of the few things you can buy for you home or business that actually make you money (eventually). The problem was always that like high efficiency bulbs there is a high upfront cost that then pays back over time. But even that is no longer true. Companies like Solar City will lease you a solar power system and you end up paying less on the lease than you paid to the utility. Cities like Berkeley will allow you to finance a solar system and pay off the loan as part of your property tax - a wonderful idea, when you sell the house the loan transfers to the new owner. This idea is sure to spread to other cities. So bottom line, if you want a solar system upfront cost is not necessarily a barrier, especially if you live in a sunny area with high electricity cost.

That all said, to address your actual question. The cost of a solar system is about 50% the electronics (solar panels & a box to convert the power to AC that your home can use) and 50% installation labor and hardware. In California a residential customer will end up paying maybe $6~7 per watt for the system (I paid $8/W 4 years ago). A typical single family home might have a 3000~4000W system (that is the peak power it can produce). So you're looking at about $18~28K cost to install. So about $3/W is paying for the solar cells & the inverter. Today the lowest cost producer of solar cells (First Solar) spends about $0.85/W to manufacturer a solar panel and they sell that panel for around $1.60/W which is about the lowest price you can get from any solar maker at the moment. Those are wholesale prices, so the various markup's and the cost of the inverter get you to the $3/W figure. So you see that of the $7/W you spend only around $1/W is the basic cost of the panel. FWIT these numbers are very general and are changing all the time - the aim of the solar industry is to reach parity with the cheapest power available (coal) without any subsidy (note that coal is cheap because it receives huge government support and doesn't have to pay the costs of its own pollution). This will definitely happen mostly through a huge scale up of the manufacturing base and the introduction of better technologies.
posted by Long Way To Go at 10:54 AM on June 27, 2010 [3 favorites]

One of the things that hasn't been mentioned yet is scale. We all have seen the 99 cent solar calculators at the dollar store and so we kind of tend to think of those as just another kind of electronics. But there is a vast chasm between the needs of small hand held electronics and the needs of a household, so any kind of cell that is going to make an appreciable dent in the amount of power you have to buy from the grid is going to have to be comparably huge. And often the cost scaling isn't linear: making a chip with 2x the area costs a lot more than 2x the price. Unless, that is, there is a huge mass market driving innovation in manufacturing, which is the case for things like CPUs and iPhones, but not so much for pv arrays -- yet.
posted by Rhomboid at 2:09 PM on June 27, 2010

The other issue that has affected the price in recent years is the scale of the PV industry compared to the semi-conductor industry. Solar panels need high-quality silicon, and for many years they were able to 'piggyback' on the semi conductor industry and effectively use the leftovers from that industry.

Demand for silicon is increasing world-wide because we all want more silicon based goodies. Solar manufacture is now on a scale that it competes with the semi-conductor industry for high quality silicon. This has been keeping solar panel prices a little higher than they would've been for some years now - in 2005, the solar company I worked for was seriously considering buying majority shares in a silicon company in order to secure supply.

This is also why there is so much investigation of thin film silicon technology (which uses less silicon) and also alternative photovoltaic technologies.
posted by girlgenius at 9:42 PM on June 27, 2010

you're also talking about a mature tech (microwaves were commercialized in the 50s and little has changed since then, except computerization) vs. a developing tech (the fundamental structure and design of PV panels is still seeing significant innovation). Once the big engineering gains are accomplished, manufacturers will no longer have such a moving target, and volume production will be less risky (thus less costly).
posted by Chris4d at 9:36 AM on June 28, 2010

Interesting look at how seemingly simple solar can be -- a small DIY home solar system:
posted by mmf at 12:00 PM on June 28, 2010

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