The rise and fall: Utility versus Solar prices…

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It is a proven fact: Across the US, utility costs have risen 60% over the last 20 years, and solar costs have decreased 60% over the last 10 years. And here is why.

The demand for electricity has grown steadily over the years and utility companies needed to spend significant money on new and existing infrastructure to keep up with this demand. This has been paid for by customers in the form of continuous rate increases for electricity.

The predominant technologies which utilities have used to generate electricity have not changed substantially in the last two decades. Monies have been spent to improve emissions of fossil fuel burning plants, but less so on improving their efficiency. Renewables have been added to the portfolio, but solar electricity still only accounts for 2.2% of generation by utilities.

Utilities are at the mercy of fuel costs for their non-renewable generation. These costs are determined globally, fluctuate often, and historically have trended upwards. Whether it be crude oil, natural gas, coal, or uranium, they all add their premium to the price of electricity to the consumer.

With climate change on top of the agenda for many, non-renewable generation sources face pressures and costs to earn carbon credits, or utilities must consider the switch to renewable electrical generation.

More recently, inflation, hiring and supply chain issues have gripped the economy. Utilities require generation, transmission, distribution, metering, maintenance, administration, promotion, rate approval and management to produce electricity for their customers. Each of these requires significant equipment and labor which are greatly impacted by past, current and future economic conditions.

On the other hand, Solar technologies are relatively new, evolving, improving in efficiency, and reducing in cost with the expansion of the industry. Government support programs of tax credits are being phased out as these costs reduce further. The result is a bottoming out of the net cost to the homeowner for investing in solar.

The same cost pressures in the economy are expected to have an effect on the solar industry. There is one very important difference between the cost of solar and utility electricity. In the case of residence or commercial solar electric generation, the required investment is only made at the onset. The system can be warranted and guaranteed for 30 years, powered by free sunlight, keeping panels and equipment clean, yielding a low, fixed cost for this clean source of electricity.

So enough of looking back. We can look forward to a clean, stable and cost-effective energy future with solar.

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