Solar panel price collapse

Just had the odd experience of sitting in a café in Paris (first foreign holiday for ages) and the guy next to me opening up the Guardian on my story, filed a few days before, on the collapse of solar prices:

Prices of solar panels are falling so fast that by 2013 they will be half of what they cost in 2009, according to a report from Ernst & Young that argues solar electricity could play “an important role” in meeting the UK’s renewable energy targets.

The average one-off installation cost of solar photovoltaic (PV) panels has already dropped from more than $2 (£1.23) per unit of generating capacity in 2009 to about $1.50 in 2011. Based on broker reports and industry analysis, the report forecasts that those rates of decline will continue, with prices falling close to the $1 mark in 2013

The thing I didn’t have time to explore in the story is that most analysts agree that the price decline is linked to oversupply of panels – and that the oversupply is in turn linked to a downturn in the level of support given to solar via feed-in tariffs in key and potentially key European countries such as Germany, Italy, Spain and the UK.

It’s hard to know exactly what to take from that link, policy-wise, but it’s clear that the price of the technology and the support it receives and/or deserves are bound up in a complex way. When I interviewed energy minister Greg Barker last month, he said the feed-in tariffs were in crisis in the UK partly because of the unexpected price fall of solar PV technology. And yet the price fall, it seems, it partly related to the collapse of the feed-in tariffs in other countries.

I don’t have time to explore that right now, but I hope to write something more extensive on solar prices in the next month or two. From reading and writing quite a bit about solar recently, it seems everyone has a view on solar costs but very few commentators have bothered properly exploring the assumptions underlying any estimate of how different energy technologies compare on price. More to follow.

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