Report: Solar Power to Be 50% Cheaper by Year End

Nov 29 2009 | 8:30pm ET

Energy research company New Energy Finance is predicting a 50% year-on-year drop in the “levelized” cost of solar power (that is, the lifetime cost per kWh before subsidies) by the end of 2009.

The report also expects a 10% reduction in the levelized cost of other sources of renewable energy compared to the end of 2008.

The predictions are found in the company’s latest quarterly report.

“So far this year, the steady decline in the cost of equipment in sectors like solar and wind has been largely offset by the increasing costs of financing,” said New Energy Finance chairman and CEO Michael Liebreich in a statement. “By the end of this year, however, as capital markets loosen up and equipment prices continue their decline, we will see the levelized costs decline, finishing the year 10% below the end of last year across the board and far more than that in solar.”

The report notes that photovoltaic (PV) module prices have continued to fall, although the rate of decline has slowed. Thin-film remains the low-cost leader in solar projects, as cheap as $3/W, making thin-film projects 25% less expensive than crystalline silicon systems on a levelized basis. PV projects with tracking systems have seen the least reduction in cost, says New Energy Finance, because “costs for single- and double-axis trackers have remained buoyant relative to panel prices.”

The 50% drop refers to the cost of generating solar power over the lifetime of a solar plant. This cost is now at $160 per megawatt-hour in sunny locales like Arizona.

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