A cool-down in European solar markets combined with an over-supply of panels from China has led to a massive decline in solar panel prices. Over the last year, prices for solar panels have fallen 50 percent. In the U.S., falling prices spell competition, and many solar providers are hustling to position themselves to take advantage of a rapidly changing solar industry.
While solar panel manufacturers have taken a hit from the 50-percent reduction caused by the glut of supplies, home solar contractors are seeing their profits rise. SolarCity, the nation’s largest residential solar installer, is expected to initiate a public offering this year.
As solar providers stabilize their bottom line, they attract more investors. Previously, investors have been drawn to large-scale solar energy projects, but as the market shifts, they are increasingly backing smaller installation contractors. Investment firms are predicting that if solar brands succeed with public offerings, the market could experience exponential growth.
Homeowners have enjoyed lower installation costs as well. According to the Lawrence Berkeley National Lab’s Tracking the Sun report, the cost of installing home PV systems has dropped 43 percent over the last dozen years.
The most recent drop in solar panel prices, however, has been slow to make a difference in what homeowners pay. Savings from lower component prices first impact distributors, integrators and providers before showing up in installed prices.
A fragmented industry makes it harder to pass on savings to customers, too. As yet, there are no major wholesale solar parts distributors. Most solar contractors purchase the various equipment needed for installations from a number of manufacturers, driving up costs.
The industry is beginning to address this issue as well. You can expect to see installation costs continue to drop as players in the competitive solar market find their niche.