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Solar Silicon Price Drop Brings Renewable Power Closer

As nations install more solar-generated electricity, it becomes less expensive to produce. In several countries, the learning curve has already led to prices competitive with conventional power.

Solar’s ‘Learning Curve’

Solar power has reached a long-sought industry goal: silicon modules at a cost of one dollar per Watt of capacity. This chart shows the industry’s learning curve. For conventional panels, the price drops 24 percent for every doubling of total installation. For thin-film panels, made by First Solar, the cost falls 13 percent when capacity doubles.

Bloomberg New Energy Finance’s solar module price index stands at $1.03 per watt, a 45 percent price drop since March 2011, but up from the end of December 2011. Global manufacturing capacity is far ahead of demand -- the reason why Solyndra went bust. The average stock price drop among top solar module makers was 65.6 percent in the last year.

Crystaline silicon panels

First Solar Thin Film Panels

Solar’s Golden Goal

Year: 2012

Annual Return on Investment*: 6%

Solar electricity providers have reached what experts call the “golden goal” of grid parity, when putting solar modules on the roof to replace electricity purchase from the grid is a good investment for consumers.

Several countries that have high power prices are already there: Germany, Denmark, Portugal, Spain and Australia. Brazil is also above the 6% level, but consumers may require higher returns on investment in a developing economy. Japan, France, Greece and Turkey are expected to be there by 2015, and by 2020 even the US average price is high enough to justify investment, even without the 30 percent investment tax credit subsidy.

Use the sliders above to calculate when solar power may begin to make money in certain economies.

Golden Goal

Countries Meeting Golden Goal

Countries Missing Golden Goal

*Annual return on investment is the weighted average cost of capital, a measure of the minimum expected return of investing in other assets

Data compiled by Bloomberg New Energy Finance.

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