Solar power poised for growth in the US market

Up to 75 per cent of installation costs for solar panels are covered by subsidies in the United States. That amount is scheduled to drop by 2016. Lower costs of solar panels are expected to make solar competitive with fossil fuels. 

The costs of solar power installations are falling and the number of installations in the United States doubled last year. They are expected to double again this year. Plans for new solar energy exceed plans for any other power source, including nuclear, coal, natural gas and wind, according to a Businessweek report.

While solar energy's share of the total energy business is tiny, enough to power just 600,000 homes in the United States, the potential is great, and growing as costs of manufacturing solar panels come down. Today, solar energy costs three times more than electricity produced by natural gas, but the price of solar panels has dropped by two-thirds since 2008. Solar panels are priced based on the amount of power they can produce during full sunshine. In September, they sold for $1.34 per watt, according to data from Bloomberg New Energy Finance. In 2008, they sold for $4 a watt.

Across the US, solar power installations increased by 102 per cent from 2009 to 2010. Large utility companies like Exelon ande NRG Energy are spending billions to install solar systems on commercial rooftops.

It is still a heavily subsidized power source in the US, with up to 75 per cent of the cost of residential solar energy covered by state and federal subsidies. But as prices for solar panels continue to drop, advocates say that solar will soon be able to compete with fossil fuels even with fewer subsidies. With greater adoption of solar energy, prices will fall further. As General Electric Co., Samsung and other big companies enter the market, greater supply will bring down costs even further. GE announced this month that it would build the largest panel factory in the US near Denver.

One option for consumers is that of having the electric company install and maintain the solar panels then paying them for the power. A handful of companies now offer this option. The consumer pays nothing for installation and pays less for his power. The no-money-down plans are most popular in California, where more than half the residential solar systems installed so far this year have used them. Even Google has got into the solar business, announcing a fund that would allow local installers in every state to offer the no-money-down plans to their customers. And big hardware chains like Home Depot are cooperating with installers in making consumers more aware of the solar option.