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There are two main factors that govern solar power cost and they are quite simply, the production cost of the solar power panels and the installation cost of the solar system in the home.

Solar panels may be efficient, eco-friendly and help to save our planet but unless they can be competitive in the energy market place they will never be widely used. A new coal-burning plant can easily deliver electrical power at $2 per watt and so this is the benchmark figure that the solar experts are trying to match.

For the past 20 years scientists have been developing ingenious and cheaper designs of solar panels. It is the Silicone based solar photovoltaic panels which have dominated the industry and sell for about $3 a watt, however this is before installation.

For a while there was an actual scarcity of silicone and although the interest in solar panels was increasing, the solar panel suppliers were not able to fulfill that demand. Today even though there is an ample supply of silicone, still the operation of refining it to make the semiconductors is a costly process and there are not many facilities that do this. The handful of factories that can produce this refined silicone have a monopoly on the supply meaning that while the demand is high they still keep the price inflated.

The price of refined silicone is one of the key factors in the cost of solar panels. The key thrust of research going on today is in developing ways to reduce the quantity of silicone that is required to produce a solar panel. There is also investigation taking place in using alternative less expensive materials that are equally effective. There are specific organic materials which have semiconductor properties which may be used rather than silicone.

The cost of installation will change quite dramatically depending on whether you do it by yourself or if you call in a professional installer. To install a solar power system in your own home using a professional installer will cost you between $10 - $12 per watt. If you install the solar system yourself then it should probably cost you about $4 per watt.

Whilst the initial cost of installation of a home solar energy system would still be relatively expensive there is no doubt that in the near future, given the astounding developments that are happening, the cost should come down. In the mean time, governments all over the world are encouraging and subsidizing the use of this particular technology by offering tax rebates and credits for homeowners who install solar energy systems.

So if you set up your solar power system by yourself at the cost of approximately $4 per watt and claim all the tax savings and incentives that are offered in your area, then your solar power cost may not be so far from the $2 per watt standard of the energy delivered by the coal-burning plant.

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