Despite decades of technological advancement in converting sunlight into electricity, solar power only gained traction as an energy alternative in the 2000s. The solar industry is maturing and technology is improving, resulting in efficient components and low installation costs.

From being a passion project for the wealthy and environmentally conscious in the 1990s, solar energy has become a low-cost, emission-free option for businesses, homes, and farms.

Costs have fallen sharply in recent years as more people go solar. Is this decline likely to continue into the 2020s? We'll look into how solar's costs have declined, as well as where the industry expects them to be in five to ten years.

What is the decrease in solar power costs?

In 2000, the average cost of a 50 kW solar system would be $11 per watt. In total, that's $550,000. In 2010, you would pay around $6 a watt for that system, making it $300,000.

What will the cost of solar be in 2030? Before incentives, you could get a 50 kW system for just $112,500. This system could cost around $83,250, or even less if local incentives are available because there is a wide range of national and local incentives readily available to everyone wishing to own solar systems. That's about $1.70 per watt. This size of system would eliminate electric bills up to $600 each month. It would soon pay for itself and generate thousands of dollars in savings over its long lifetime.

Here's an important fact: the cost per watt of a solar system is heavily dependent on its size. A smaller system will cost about $3.05 per watt after incentives, a much larger system can cost $1.44 per watt after incentives.

The dramatic drop cost of solar over the two decades makes it both financially and environmentally beneficial.

Why did the cost of solar decrease?

Technology has advanced rapidly in recent years, for example, your phone. It holds more power than NASA's Apollo 11 guidance computers, which guided astronauts to the moon. Aside from being smaller and powerful, your smartphone is much smaller and less expensive than NASA's old computers.

For PV solar technology, the same principles apply. A few other factors also contributed to solar's dramatic price drop.

Panels became more efficient as technology improved. In practice, this means that you would need fewer panels to meet your energy goals and that you would be able to generate more electricity from a single panel. With better technology and lower costs, solar became more popular. Developing more efficient solar panels led to a lower price.

How much will solar power cost in the future?

The price decline from the last two decades is unlikely to continue in the 2020s, but there will be some price decreases.

It becomes increasingly difficult to reduce the "hard costs" in the manufacturing and installation processes, meaning "soft costs" take up a larger portion of the price. A hard cost is the price of the panels and inverters themselves. Soft costs include things like permits and financing.

According to the US Department of Energy, soft costs comprise 64% of the cost of residential solar systems. Inflation will likely increase these costs, contributing to an ever-increasing solar system cost. Despite continuing hard cost decreases, the overall cost of installing a system is expected to decrease less.

According to the BNEF New Energy Outlook 2019, the overall cost hasn't reached its lowest point. According to Bloomberg's market experts, solar costs will decrease by 34% by 2030.

However, it will be a less drastic decline than from 2000 to 2020, it still demonstrates that solar is getting cheaper.

Is it Worth Waiting to Go Solar?

Is it better to wait a few years before installing solar at your home, business, or farm if the cost of solar continues to decrease?

Possibly, if it was 2010, yes. The answer is almost certainly no in 2020.

Waiting ten years for that predicted decrease in price isn't worth it due to two main reasons: not being able to take advantage of the solar investment tax credit and paying thousands of dollars on your electric bill while you wait.

You won't be able to claim the federal tax credit

As a result of the federal government's Solar Investment Tax Credit (ITC) in 2006, the American solar industry received a significant boost. The tax credit helped federal taxpayers recoup 30% of the installation costs of solar systems. Through the credit, solar energy became more affordable, and more people invested in it. As a result, the industry was able to make technological and manufacturing advancements that reduced installation costs.

As a result of the declining costs of installing solar systems, the government is phasing out the ITC.

Tax credits dropped from 30% to 26% in 2020. Credit will again drop to 22% in 2023. By 2024, commercial credits will drop to 10% and residential credits will be gone entirely.

Homeowners and businesses would pay 26% more for solar systems if they waited just two years. The cost of the system might go up by as much as 4% by 2023, which would be a substantial sum of money.

In 2021, 2023, 2024, and beyond, you'll pay the following:

If you take full advantage of the solar tax credit, you will likely save more money than you would if you waited for installation prices to decrease.

While you wait, think about how much electricity you will have to pay.

By using solar energy instead of buying electricity from the utility company, you save a lot of money. Without solar, each month you pay an unnecessary electric bill.

You could have kept that money in your pocket or invested it somewhere else if you add them up over a year, two years, or longer.

Almost all solar panel manufacturers guarantee their panels for at least 25 years. Even if their manufacturer's warranty has expired, your panels will still produce energy. Solar systems can continue to generate electricity for decades. You'll save money if you take advantage of them sooner rather than later.