[Answer content currently under review - 12/10/2016]
The so-called “cost-barrier” to PVs is overstated. Costs are not a barrier to large systems, remote systems, systems where competing costs are high (e.g. Japan), or when environmental costs are given any consideration at all.
- Many in the solar community would (if predictably) say “What cost hurdle?” And they have a point. Japan has removed all incentives as of Jan. 06 and the orders are still very strong. Of course, electricity prices are not subsidized as they are here, so they tend to be higher.
- Solar is now cheaper than conventional electricity in most of the rest of the world. Electricity, like oil, is subsidized in the US. Japan ’s retail electric rate is $0.25 / kWh (about 3 times Arizona ’s average rate)
- Many recent studies have pegged the per kWh cost at below $0.10/kWh. The recent spot market cost for PVNGS is over $0.10/kWh. It is widely known that the estimated cost per kWh is thought to be 3-5 cents per kWh for large-scale systems in the 100 MW range.
- Tucson Electric Power generates currently at 9.9 cents/kWh, albeit their system is adjacent to their existing coal-burning Springerville power plant, obviating the need for the usual infrastructural costs (transmission, land, etc.). Their site might be a ideal site for additional large-scale centralized installations.
- “The new federal energy bill also includes an important component for the current discussion. Beginning in 2006, residential solar systems are eligible for a 30% tax credit. [“Residential Solar and Fuel Cell Tax Credit,” Database for State Incentives for Renewable Energy, DSIRE data for AZ & US, accessed September 30, 2005]. This web site is an amazing collection of state and federal policies concerning renewable energy. The database is updated almost daily. ] The tax credit is allowable on the installation price less the state tax credit. So in this case, the allowable credit is $4,050 based on the $13,500 net after the state tax credit ($14,500– 1000 = $13,500 X .30 = $1,350).” Out of pocket expense is thus $9,400 for a five kW system (most people around here have been installing 3-8 kW).
Table 1: Net cost of a 5kW system
Retail Cost ($)
Az Tax Credit ($)
Federal Tax Credit
30% of $13500
|Out of Pocket Expense ($)
- It should also be said that the use of PV is an economic choice right now for off-grid and remote locations, including many Indian reservations. If one were to give any value at all to the environmental benefits of using solar, there would be no question that it was economic. The economic argument may well be the most compelling, as solar emits no greenhouse gases after manufacture and an infinitesimal amount when compared to coal.
- Many solar dealers/installers are offering leased systems with little up-front cost. These have become very popular starting in 2015.
- Caution: Recent changes in electrical service rates for homeowners with PV systems by SRP (and applied for by APS, etc.) along with changes in net metering will impact the savings. This is complicated, make sure that the dealer explains the situation. See the topics under 'Economics' on the top menu of our main web page.