Cost & Economical Impacts of Solar Power

Short-Term Cost

• For the majority of consumers, generating solar energy is prohibitively expensive. At the moment, solar energy per kilowatt hour (KW/h) is four times as costly as electricity generated from coal-fired power plants. Recognizing that solar power is economically inefficient in the short term, but valuable in the long-term, many governments have incentivized the use of solar panels by allowing individuals to sell electricity generated at their homes back to the power grid at an inflated price. Nevertheless, the high startup cost (approximately $6,600 for an average-sized house) makes installation of solar panels inaccessible to a large portion of the population.

Long-Term Cost

• In the last decade or so, surveys indicate that the cost of solar energy is diminishing by approximately 4 percent each year. As technology becomes more efficient and the scale of production increases, the solar power industry is able to cut costs in production and benefit from economies of scale. Furthermore, as solar panel production requires advanced research and technological capabilities, production can really only take place in advanced industrial states. Consequently, many governments see solar power, and the renewable energy industry at large, as a future source of economic growth and employment.

Concentrated Solar Power

• Photovoltaic cells are the primary base unit for capturing sunlight on a photoreactive material and converting it to voltage, which is stored in a battery. Concentrated photovoltaics is an emerging technology that uses reflective dishes or lenses to focus and concentrate sunlight onto a solar cell. This increases the maximum efficiency of solar cells from 25 percent to 50 percent, essentially allowing solar panels to capture twice the amount of energy (though this has yet to be achieved in real-life testing).

Case Study: Nevada

• According to a study undertaken by the state government of Nevada, development of the state's solar power industry would have a significantly positive impact on employment and GSP (gross state product). The development of ten 100-megawatt facilities over a 10-year period, for instance, would generate 3,830 initial jobs during construction, peaking at just under 7,000 throughout the course of the project. Furthermore, these facilities would generate approximately $9.85 billion in GSP.