2010 Solar Pricing To Be About Half the 2008 Cost

By the end of the year, the levelized cost of adding solar should be about half what it was in 2008, according to new analysis by New Energy Finance.

The 50 percent drop in levelized solar costs compares to about a 10 percent drop in levelized costs for other forms of renewable energy. The levelized cost refers to the lifetime cost per kilowatt hour before subsidies.

So far this year, the higher cost of financing has canceled out some of the savings from lower product costs, New Energy Finance says. But the group expects capital markets to free up significantly by year’s end, prompting its heady prediction of a 50 percent drop in the cost of adding solar.

Thin-film solar can cost as little as $3 per watt of installed capacity, making it the least expensive option – about 25 percent less than crystalline silicone systems. Prices for photovoltaic projects with tracking systems have not declined as much, however.

As for wind, turbine prices are about 18-20 percent lower than in early 2008. But as wind projects are moved offshore, the lower costs will be offset by the engineering and technical costs of adding turbines in a coastal environment, New Energy Finance says.

Finally, the cost of drilling for geothermal energy dropped by nearly 50 percent at certain times in the past year as a lack of financing and cheaper oil dried up the market, leading to a glut of drilling services. However, that market is starting to recover, with levelized costs up 8-10 percent in the last quarter alone.

According to a recent report from the National Renewable Energy Laboratory, California has nearly 530,000 kilowatts of direct current solar (kWdc) connected to the grid, followed by New Jersey (70,000 kWdc), Colorado (35,ooo kWdc), Nevada (34,000 kWdc) and Arizona (25,000 kWdc).

Texas leads all states in wind power capacity at 7,117 MW, followed by Iowa (2,791 MW), California (2,503 MW), Minnesota (1,753 MW) and Washington (1,446 MW).