Solar Power Is Set To Get More Expensive

The sun constantly bathes half the planet with energy. The energy may be free, but the methods for converting it to electricity cost money. Last year, the Chinese government cut subsidies to their solar panel manufacturers to shrink the industry which was perceived as bloated. This forced Chinese solar panel makers to cut prices to clear inventory. This drove down prices about 30%, making solar power cheaper than ever.

Reuters is reporting that Eric Luo, president of one of the largest solar panel makers in China, predicts that “the party is definitely over.” Speaking at the World Economic Forum, Luo said that prices have quit dropping and he expected industry consolidation to cause prices to rise by as much as 15% over the next two years.

According to Reuters, China has about a third of the entire world’s installed solar capacity and they dominate the industry. Of course, the Chinese have been accused of dumping panels by both the European Union (which has recently dropped tariffs) and the United States (which is still imposing an anti-dumping tariff).

We are more likely to have opinions about the technology behind solar than the economics. But if you were thinking about buying panels, you might want to make it soon. Then again, price increases could be offset by improvements in efficiency, but it seems unlikely that efficiency will grow that fast in the next two years.

We think of using solar panels on the roof, but you could also build a bike. Of course, you might be able to save a little money if you build your own panels from raw solar cells. Or, perhaps not.