Photograph by J. Emilio Flores, The New York Times/Redux
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SolarCity workers install photovoltaic panels on a California home. The company says it has pioneered a new level of efficiency with its latest product.

Photograph by J. Emilio Flores, The New York Times/Redux

Solar Energy Sees Eye-Popping Price Drops

Solar electricity's price tag has plummeted 70 percent, says a new report, as SolarCity rolls out a low-cost, super-efficient panel.

If only the same could be said of electric bills. The price of U.S. solar power has dropped a whopping 70 percent since 2009, even as panels get smarter.

The figure, cited in a report this week from Lawrence Berkeley National Laboratory, coincides with SolarCitys debut Friday of what it calls the world's most efficient rooftop solar panel. The largest residential solar installer in the U.S. says its module can produce 38 percent more power than a standard one, yet costs less to produce.

Not bad for an industry that had no large-scale U.S. presence just a decade ago. Photovoltaic panels currently contribute only about 1 percent of all electricity, but lower costs are helping fuel the expansion of large, utility-size projects.

As historic UN climate talks near, solar's latest strides are key in the worldwide race to slash carbon emissions by paring back dependence on fossil fuels. (See surprising countries where wind and solar are booming.)

"It is quite remarkable and exciting when you have this amount of growth, and an industry goes from basically being a hobby to a mainstream industry," says Peter Rive, SolarCity's co-founder and chief technology officer. (Rive's cousin and SolarCity's chairman, Elon Musk, is also seeking to boost solar's appeal to utilities with his recently launched Tesla battery system.)

The company's new panel "takes solar a step further to be a cheaper energy source without requiring federal incentives such as the investment tax credit," Rive says.

That credit currently returns 30 percent of a solar system's cost to the buyer. Its looming expiration at the end of next year has lent urgency to the industry's efforts to bring down prices. The Berkeley Lab report predicts a "frenzied pace of construction over the next 15 months."

Contracts to buy power from large-scale solar projects average 5 cents per kilowatt hour, according to the report, while electricity prices on the wholesale market run from 3 cents to 6 cents per kilowatt hour.

The plunging cost of solar hasn't translated to lower electric bills so far: In most regions—even ones with big solar plants—people are paying a bit more for power than they did a few years ago, because many different factors go into determining retail electricity rates. Rather, the trend means more of that power might be coming from carbon-free sources that are less subject to the price shocks of fossil fuels.

While it's difficult to make a direct cost comparison between new solar projects and existing fossil fuel power plants, says report co-author Mark Bolinger, solar is getting to a point where it can compete with coal and natural gas for electricity in some places.

"Just a few years ago, that was much more of a stretch," he says.

The falling price of power from large-scale solar projects reflects the lower cost of building them. The report notes that cost fell by more than 50 percent between 2009 and 2014. At the same time, solar farms have seen a "notable improvement" in how much power they put out, thanks to smarter siting and better technology.

SolarCity is aiming to apply its own gains in efficiency and cost to the residential market when it begins production at its 1-gigawatt facility in Buffalo, New York, in early 2017. Its new rooftop panel, which earned a rating of 22.04 percent efficiency in a third-party certification test, surpasses an earlier record set by SunPower, which has a high-efficiency model rated at 21.5 percent.

Another trend Bolinger called "encouraging": Solar's reach is expanding. Most development has been centered in the Southwest, but Bolinger says big solar power contracts are cropping up in Alabama, Arkansas, Florida, and Georgia—states that "haven't seen much solar development in the past to speak of."

Of course, prices won't keep tumbling so steeply in the years ahead. What we might see instead, Bolinger says, is that the market for solar will just continue to expand.

The story is part of a special series that explores energy issues. For more, visit The Great Energy Challenge.

On Twitter: Follow Christina Nunez and get more environment and energy coverage at NatGeoEnergy.