Prices for panels are down more than 65 percent in five years, to less than 70¢ a watt. What’s next?
One word, Ben: financing.
Building a solar generating facility—either a massive one in a desert or a tiny one on the roof—involves serious up-front costs. In extreme cases, the cost of capital can make power almost 50 percent more expensive than it would otherwise be, says a report released Tuesday, Feb. 24, by the independent German research group Agora Energiewende. These costs can even influence the ultimate price of electricity more than the amount of sunlight a region receives.
But the industry is growing up in ways that are leading to both lower costs overall and, as GreenTech Media has reported, faster installations. Solar developers, banks, nonprofits, and other industry players are creating tools that are standard in mature financial markets. These are the business practices that don’t make for dramatic headlines but need attention if the industry is going to reach adulthood: credit ratings, due diligence standards, and in general, cheaper ways to find and close deals. The easier these things become, and the more deals are done, the less risk investors face.