The cost of solar power has plummeted as of 2023 and the years preceding it. In many places, solar power is even cheaper than coal or other fossil fuels. Thanks to generous tax credits and subsidies, solar installatiꦆons are now increasing worldwide. Below, we cover some of the economic considerations surrounding solar energy.

Understanding the Economics of Solar Power

Even with the massive strides made in technological innovation, sustainable energy has not yet replaced traditional fossil fuels. To incentivize 澳洲幸运5官方开奖结果体彩网:renewable energy adoption, governments have levied t❀ax credits for solar and wind energy, which until recently, were far more ex🎐pensive than the status quo.

Due to increased production, government subsidies, and mounting environmental concerns, the direct costs of solar and wind energy for consumers have decreased. Some markets 澳洲幸运5官方开奖结果体彩网:🌠genera♛te renewable energy more cheaply for consumers than fossil fuels. While wind energy, such as wind farms, is pr༒edominanওtly used for commercial means, solar energy has both commercial and residential uses.

The True Cost of Fossil Fuels

Although an exact date is difficult to determine, many estimates suggest that fossil fuels will be depleted in less than 100 years—oil by 2052, gas by 2060, and coal by 2090. While sources of coal, 澳洲幸运5官方开奖结果体彩网:natural gas, and crude oil have continued to deteriorate, the consumption of🌺 fossil fuels has not.

For power generation in the United States, fossil fuels are still used far more than both renewable energy and 澳洲幸运5官方开奖结果体彩网:nuclear power. As of 2023, all fossil fuels made up 60% of U.S. electricity generation. Nuclear power accounted for 18.6% and renewables for 21.4%. Solar power, which is part of the renewable energy category, produced 3.9% of U.S. electricity in 2023.

Not only are fossil fuels nonrenewable, but they are also a cause of various adverse environmental effects. Burning fossil fuels is the leading producer of anthropogenic CO₂, which contributes significantly to climate change. Notable effects include global warming, melting ice in the Arctic, rising sea levels, and poor crop yields.

Accumulating Economic Costs

Despite the harmful effects of fossil fuels on both human health and the environment, governments continue to subsidize them, including the United States government. According to the 澳洲幸运5官方开奖结果体彩网:International Monetary Fund (IMF), global fossil fuel subsidies amounted to $7 trillion in 2022. 澳洲幸运5官方开奖结果体彩网:World Bank estimates show that the harm done by air pollution causes $8.1 trillion in damage each year and causes 6.4 million deaths annually. 

Price of Solar Power

Though renewable energy represents a fraction of total energy consumed, the U.S. is the second-largest consumer of renewable energy. Yet, despite the increase of available solar energy over the past 10 years, solar still only accounts for 3.9% of the total power generated in the United States in 2023. Solar was the third most used renewable source, trailing wind at 10.2% and hydropower at 5.7%.

Only two types of solar technology exist that are capable of converting the sun’s energy into a source of power: solar thermal and photovoltaic. Solar thermal collectors absorb the sun’s radiation to heat a home or wa☂ter. Photovoltaic devices use sunlight to replace or supplement the electricity pr♚ovided on the utility grid.

Adoption of Solar Power

Solar energy systems were only accessible to the wealthy or fanatical.🤡 However, due to sharply declining costs, universal access to solar paneling systems is becoming a reality.

In 2003, the average residential U.S. solar system cost $10 per watt. As of 2024, the cost of solar power fell to about $0.06 per kWh. It was the government's goal to get costs down to this level by 2020, which it reached by that year.

In light of this, the U.S. Department of Energy's SunShot initiative set a new target to lower the cost by 50% to $0.03 per kWh by 2030. For comparison, the cost of combined cycle natural gas power is $39 to $101 per MWh which equals $0.039 to $0.101 per kWh. Coal is even more costly at $68 to $166 per MWh which would be $0.068 to $0.166 per kWh.

As a result, the number of photovoltaic systems installed in the U.S. increased drastically among residential and commercial spaces. Between 2014 and 2023, solar power generation increased by more than eight times to 238,121 gigawatt-hours.

A Global Increase

Solar energy has seen a global increase in consumption as more countries recognize the harmful effects of burning fossil fuels. Increased competition within 澳洲幸运5官方开奖结果体彩网:the solar power industry has resulted in sharp declines in i﷽nstallation costs.

Many of the largest economies, including the U.S., China, India, and several European nations, have begun to implement solar energy. To combat pollution, China has made the biggest push into 澳洲幸运5官方开奖结果体彩网:renewable energy and installed a large quantity of photovoltaics.

India, which is also plagued by pollution, has made a target to reach 500 gigawatts of renewable energy by 2030. As of May 2023, India stood at more than 125 gigawatts of renewable power. In the United States, the government expects solar power generation to grow 75% between 2023 and 2025.

Big Businesses

Big businesses are also 澳洲幸运🥃5官方开奖结果体彩网:investing in reusable solar systems. Walmart (WMT), Amazon (AMZN), and Apple (AAPL) have already switched some stores, offices, and facilities to solar energy.

Alphabet's Google (GOOG/GOOGL) has been a massive adopter of solar power and clean energy. From 2010 to 2023, the company signed 115 clean power agreements totaling over 14 gigawatts of energy. This is the equivalent of 36 million solar panels. Although it should be said, these agreements include wind and other power forms in addition to solar. The company pledges to run completely on clean energy by 2030.

Although solar power continues to account for a small share of the overall energy supply, the residential and commercial sectors are slowly embracing renewable energy. As prices continue to decline, solar energy systems are expected to become more prevalent. In Europe, the price per kilowatt-hour is expected to decline to between $0.04 and $0.06 in 2025 and further decrease to as low as $0.02 in 2050.

Solar Photovoltaics

Assuming forecasts are correct, solar photovoltaics will be among the cheapest sources of energy. With declining prices, the U.S. 澳洲幸运5官方开奖结果体彩网:Department of Energy (DOE) projects solar power to account for 40% of U.S. electricity by 2035 and 45% by 2050. This would require producing 1600 gigawatts with solar technology.

Another estimate from the Lappeenranta University of Technology in Finland believes that solar could account for 76% of global electricity consumption by 2050.

In conjunction with the increased production of renewable energy, there is an increasing commitment to declining greenhouse gas emissions from burning fossil fuels. Many governments have committed to cutting greenhouse gas emissions. In the U.S., New York has committed to an 85% reduction from 1990 levels by 2050. California has a statutory mandate to reduce emissions 40% below 1990 levels by 2030. The state has since released an even more aggressive plan with the goal of 48% by 2030 and 85% by 2045.

Solar Power Tax Credits

Even though solar energy systems are more cost-effective today, residential and commercial usage still receive government subsidies. In the U.S., the Renewable Energy Tax Credit decreases the tax liability of solar energy users. A taxpayer can claim a credit of either 30%, 26%, or 22% of qualified expenditures for systems that serve an occupied space, depending on when the property was placed in service. The U.S. government applies the same credit to wind and geothermal systems.

Many European countries impose a 澳洲幸运5官方开奖结果体彩网:feed-in-tariff scheme to increase the appeal of renewable energy systems. Under a feed-in-tariff scheme, renewable energy system owners can collect money from the government. Costs are calculated per kilowatt-hour, with prices varying between countries.

The Bottom Line

For the most part, the commitment to renewable resources has come from individuals, big businesses, and countries. Besides solar energy, companies such as Google (GOOG) and Amazon (AMZN) have committed to using wind to power company facilities. Wi𒊎th big businesses, individuals, and countries continuing to transition to renewable energy sources, the use of 🔴fossil fuels and their adverse affects can continued to be reduced.