Solar City: Solar to get more expensive before it gets cheaper

If you are thinking of installing solar panels, don't wait.

Lyndon Rive, CEO of solar installer Solar City, says that prices for residential solar systems are climbing. Over time, they will decline. In five to seven years, he predicts solar energy will be on par with regular grid power. (Dick Swanson of SunPower has made the same prediction.)

Unfortunately, buyers right now are caught in a bind. The lingering shortage of silicon continues to keep panel prices high. Meanwhile, the subsidies are going down. Last year, California offered a rebate of $2.80 per watt, he said. This year, it's $2.20. It will go down to $1.90 next year.

Residents typically put a 3-kilowatt panel on their home.

Solar City's twist on solar installation lay in group buying. The company canvasses residential neighborhoods. When it gets 50 or so committed customers, it purchases the panels and then sends out teams of five or so installers to erect them. Volume discounts and concentrated installation leads to a reduction of about 20 percent in the overall cost, according to Rive.

Solar City recently raised $21 million. The company will use the money to build out its warehouse and hire and train people. The 12-month-old company has gone from two to over 100 employees. It concentrates on California but will expand to Colorado soon.

National chains of energy experts is a trend we wrote about. Read the dreamy article here.

Like a lot of people in the green energy business, Rive is a refugee from IT technology. He used to work at a software company called Everdream.

[karlengblom]

Price decreases > savings?

Why do these solar execs insist that their equipment will be much cheaper in a few years? Aren't they shooting themselves in the foot? Solar panels, at today's prices, has a payback time of something like 15 years. The price decrease they are predicting during the next 5 years might well be greater than the money saved on electricity bills during this time, so postponing the purchase makes more sense. Correct me if I'm wrong.

[Zeist]

They think that people will jump to buy before the prices go down. There are no big breakthroughs in the pipeline. With energy prices soaring , the demand for solar is ahead of capacity. Perhaps when supply of panels has caught up prices will go down, but I expect that by then the market will have made another jump in size and supplies will still be short.