Price of installing solar panels on your roof keeps going through the floor

A global glut of solar panels has reduced the price of powering homes in the U.S. to record lows. With federal, state, and utility rebates, many homeowners can recoup the upfront costs of installing solar panels within 10 years, the San Jose Mercury News reports. That's leading to a busy business for the mom-and-pop-dominated residential-solar panel industry -- and a fast-moving game of "how low you can go" by solar-panel makers such as First Solar (FSLR).

As of late summer, photovoltaic solar-power panels are wholesaling for as little as $2 per watt: roughly half what they cost on the open market a year or two ago. Prices of 4- and 5-watt installations have dropped below the $15,000 mark for the first time in some markets. Buying groups have begun to spring up in U.S. cities to negotiate better prices, according to The Wall Street Journal.
A confluence of factors has caused the price crash. China has continued to subsidize solar-panel production by domestic makers, even as the supply-and-demand balance has swung from shortage to massive glut. Spain's cash-strapped government has slashed subsidies paid to utilities that use solar power to produce electricity, resulting in a big drop in demand in the world's second-largest market for solar panels.

In the U.S., the federal government has upped tax breaks to let homeowners take a credit for 30 percent of the upfront installation price. States such as California, whose power grid is stretched to the breaking point, have also kicked in with their own state-tax credits and utility rebates.

At the same time, installation of solar panels has grown easier and more modular, allowing panel installers to put more power on a rooftop, in fewer hours (and, significantly, with lower labor costs).

Prices for other key components of residential solar installations, such as inverters, have not fallen yet, but that could change quickly as demand rises and production increases to create economies of scale. And for homeowners unwilling or unable to pay that much upfront, a handful of new companies, such as SunRun, pay for the initial installation and sell back the power created by the solar array to the homeowner at a fixed price.

Germany, the largest buyer of solar panels, is contemplating decreases in government subsidies: a step that could drop panel prices even further. For its part, the Chinese government is showing no signs of pulling back on its subsidies to makers of photovoltaics.

The only real losers in this equation have been the panel makers, whose stock over the past six months has been battered, according to USA Today. Shares of market leader First Solar have fallen by more than 25 percent this year, even as the S&P has risen more than 10 percent -- proving that even a hot trend can burn the very companies who had hoped to profit from them.
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